What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 425 added, 565 removed, 1293 unchanged (43% of the section changed)

15 unchanged sentences

Discontinued Operations 66

Held-for-Sale Business 75

Intangible Assets 67

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Segment Information 90

Separation and Transaction Costs 103

COVID-19 Related Items 92

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Related Party Transactions 98

Subsequent Events 98

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Travel + Leisure Co.

(formerly Wyndham Destinations, Inc.) and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income/(loss), comprehensive income/(loss), cash flows, and deficit for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income/(loss), comprehensive income/(loss), cash flows, and deficit for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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A further qualitative assessment is also performed by the Company which considers whether any external economic conditions or internal portfolio characteristics exist which indicate an adjustment is necessary to reflect expected impacts on the contract receivable portfolio.

Due to the economic disruption resulting from COVID-19 during the first quarter of 2020, the Company estimated an additional loan loss allowance related to the impacts on the owners’ ability to repay their contract receivables.

The Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

Given the level of difficulty required to accurately predict losses over the life of the contract receivables, including the determination of any qualitative adjustments, auditing the allowance for loan losses involved especially complex and subjective judgements.

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Our audit procedures related to the vacation ownership interest allowance for loan loss included the following, among others:

• We tested the effectiveness of controls over the Company’s Static Pool model, COVID-19 loan loss estimate, historical loss data, and the calculation of a loss rate.

• We evaluated the qualitative adjustment to the historical loss rates, including assessing the basis for the adjustments and the reasonableness of the significant assumptions for the Static Pool model and COVID-19 loan loss estimate.

• We tested the accuracy and evaluated the relevance of the historical loss data as an input to the Static Pool model and COVID-19 loan loss estimate.

• We tested the accuracy and evaluated the relevance of the historical and future projected unemployment rate data as an input to the COVID-19 loan loss estimate.

• We tested the effectiveness of controls over the Company’s static pool model, historical loss data, and the calculation of a loss rate.

• We tested the accuracy and evaluated the relevance of the historical loss data as an input to the static pool model.

• We performed our own independent analyses using alternative assumptions to assess the reasonableness of the specific allowance models used by the Company.

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Depreciation and amortization 119 124 126

COVID-19 related costs 4 88 —

Separation and related costs — — 45

Restructuring 14 ( 1 ) 39

Asset impairments/(recovery) ( 5 ) 52 27

Asset impairments/(recoveries), net 10 ( 5 ) 52

COVID-19 related costs 2 4 88

Total expenses 2,914 2,516 2,265

Gain on sale of business — — ( 68 )

Operating income/(loss) 653 618 ( 105 )

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Net income/(loss) from continuing operations 356 313 ( 253 )

(Loss)/gain on disposal of discontinued business, net of income taxes ( 5 ) ( 2 ) 18

Gain/(loss) on disposal of discontinued business, net of income taxes 1 ( 5 ) ( 2 )

Net income/(loss) attributable to Travel + Leisure Co.

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shareholders $ 357 $ 308 $ ( 255 )

Other comprehensive (loss)/income, net of tax

Foreign currency translation adjustments, net of tax ( 31 ) ( 32 ) 37

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(In millions, except share data)

2021 December 31,

As of December 31,

Cash and cash equivalents $ 550 $ 369

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Net income/(loss) $ 357 $ 308 $ ( 255 )

Loss/(gain) on disposal of discontinued business, net of income taxes 5 2 ( 18 )

(Gain)/loss on disposal of discontinued business, net of income taxes ( 1 ) 5 2

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

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Non-cash lease expense 16 17 23

Gain on sale of business — — ( 68 )

Asset impairments/(recovery) ( 5 ) 52 36

Asset impairments/(recoveries), net 10 ( 5 ) 52

Deferred income taxes ( 4 ) ( 39 ) ( 88 )

8 unchanged sentences

Deferred income 12 ( 72 ) ( 100 )

Net cash provided by operating activities - continuing operations 568 374 453

Net cash used in operating activities - discontinued operations — — ( 1 )

Net cash provided by operating activities 442 568 374

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Proceeds from asset sales 8 — —

Proceeds from sale of business, net — — 106

Other, net 1 1 9

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Repayment of notes ( 3 ) ( 903 ) ( 43 )

Repayments of vacation ownership inventory arrangement — ( 16 ) ( 12 )

Repurchase of common stock ( 351 ) ( 25 ) ( 128 )

Dividends to shareholders ( 135 ) ( 109 ) ( 138 )

Payment of deferred acquisition consideration ( 19 ) ( 30 ) ( 11 )

Repurchase of common stock ( 25 ) ( 128 ) ( 340 )

Debt issuance/modification costs ( 19 ) ( 20 ) ( 20 )

Net share settlement of incentive equity awards ( 7 ) ( 9 ) ( 2 )

Cash transferred to Wyndham Hotels related to Spin-off — — ( 69 )

Repayments of vacation ownership inventory arrangement ( 6 ) — ( 16 )

Proceeds from issuance of common stock 10 11 7

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Balance as of December 31, 2019 88.1 $ 2 $ ( 6,383 ) $ 4,118 $ 1,785 $ ( 52 ) $ 6 $ ( 524 )

Net income — — — — 507 — — 507

Net loss — — — — ( 255 ) — — ( 255 )

Other comprehensive income — — — — — 36 — 36

Issuance of shares for RSU vesting 0.2 — — — — — — —

Net share settlement of stock-based compensation — — — ( 2 ) — — — ( 2 )

Employee stock purchase program 0.2 — — 11 — — — 11

Employee stock purchase program issuances 0.2 — — 7 — — — 7

Change in stock-based compensation — — — 20 — — — 20

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Dividends ($1.60 per share) — — — — ( 140 ) — — ( 140 )

Distribution for separation of Wyndham Hotels and adjustments related to discontinued business — — — — 3 — — 3

Acquisition of a business 0.5 — — 14 — — — 14

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Balance as of December 31, 2020 85.9 2 ( 6,508 ) 4,157 1,390 ( 16 ) 7 ( 968 )

Net loss — — — — ( 255 ) — — ( 255 )

Other comprehensive income — — — — — 36 — 36

Net income — — — — 308 — — 308

Other comprehensive loss — — — — — ( 32 ) — ( 32 )

Stock option exercises 0.1 — — 4 — — — 4

Issuance of shares for RSU vesting 0.3 — — — — — — —

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Dividends ($1.25 per share) — — — — ( 111 ) — — ( 111 )

Acquisition of a business 0.5 — — 14 — — — 14

Non-controlling interest ownership change — — — — — — 1 1

Balance as of December 31, 2021 85.9 2 ( 6,534 ) 4,192 1,587 ( 48 ) 7 ( 794 )

1 unchanged sentence

Other comprehensive loss — — — — — ( 31 ) — ( 31 )

Stock option exercises 0.1 — — 4 — — — 4

Issuance of shares for RSU vesting 0.4 — — — — — — —

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Dividends ($1.60 per share) — — — — ( 136 ) — — ( 136 )

Non-controlling interest ownership change — — — — — — 2 2

Other — — — 3 — — — 3

Balance as of December 31, 2022 78.4 $ 2 $ ( 6,886 ) $ 4,242 $ 1,808 $ ( 79 ) $ 9 $ ( 904 )

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Background and Basis of Presentation

On January 5, 2021, Wyndham Destinations, Inc.

acquired the Travel + Leisure brand and related assets from Meredith Corporation.

The aggregate purchase price was $ 100 million, of which $ 55 million was paid during 2021.

The remaining payments are to be completed by June 2024.

In connection with this acquisition, Wyndham Destinations, Inc.

changed its name to Travel + Leisure Co.

and its ticker symbol to TNL on February 17, 2021.

Travel + Leisure Co.

and its subsidiaries (collectively, “Travel + Leisure Co.,” or the “Company,” formerly Wyndham Destinations, Inc.) is a global provider of hospitality services and travel products.

and its subsidiaries (collectively, “Travel + Leisure Co.,” or the “Company”) is a global provider of hospitality services and travel products.

The Company has two reportable segments:

Vacation Ownership and Travel and Membership.

In connection with the Travel + Leisure brand acquisition the Company updated the names and composition of its reportable segments to better align with how the segments are managed.

The Vacation Ownership segment develops, markets, and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.

This segment is wholly comprised of the Wyndham Destinations business line.

The following brands operate under the Wyndham Destinations business line:

Club Wyndham, WorldMark by Wyndham, Shell Vacations Club, Margaritaville Vacation Club by Wyndham, and Presidential Reserve by Wyndham.

The Travel and Membership segment operates a variety of travel businesses, including three vacation exchange brands, a home exchange network, travel technology platforms, travel memberships, and direct-to-consumer rentals.

This segment is comprised of the Panorama and the Travel + Leisure Group business lines.

With the formation of the Travel + Leisure Group, the Company decided that the operations of its Extra Holidays business, which focuses on direct-to-consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of the Extra Holidays business to the Travel and Membership segment.

As such, the Company reclassified the results of its Extra Holidays business, which was previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

Prior period segment information has been restated to reflect this change.

The following brands operate under the Panorama business line:

RCI, Panorama Travel Solutions, Alliance Reservations Network (“ARN”), 7Across, The Registry Collection, and Love Home Swap.

The Travel + Leisure Group operates Travel + Leisure GO, Travel + Leisure Travel Clubs, and the Extra Holidays brands.

Due to changes in organizational structure in the second quarter of 2022, the management of the Extra Holidays business was transitioned to the Vacation Ownership segment.

As such, the Company reclassified the results of the Extra Holidays business, which was previously reported within the Travel and Membership segment, into the Vacation Ownership segment.

Prior period segment information has been updated to reflect this change.

The Travel and Membership segment operates a variety of travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals.

This segment is comprised of the Exchange and Travel Club business lines.

Impact of COVID-19

The results of operations for 2021 and 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”), which have been significantly negative for the travel industry, the Company, its customers, and employees.

In response to COVID-19, the Vacation Ownership segment temporarily closed its resorts in mid-March 2020 across the globe and suspended its sales and marketing operations.

In the Travel and Membership segment, affiliate resort closures and regional travel restrictions contributed to decreased bookings and increased cancellations.

As a result, the Company significantly reduced its workforce and furloughed thousands of associates in the second quarter of 2020.

As of December 31, 2021, the Company has reopened all of the resorts and sales offices in North America that it expects to reopen.

The remaining closed resorts and sales offices that the Company intends to reopen are located in the South Pacific and are expected to reopen in 2022, contingent upon the lifting of government imposed travel restrictions.

As a result of these reopenings the majority of the Company’s furloughed employees have returned to work.

As a precautionary measure to enhance liquidity, in the first quarter of 2020 the Company drew down its $ 1.0 billion revolving credit facility and suspended its share repurchase activity, and in the third quarter of 2020 amended the credit agreement governing its revolving credit facility and term loan B (“First Amendment”).

The First Amendment provided flexibility during the relief period spanning from July 15, 2020 through April 1, 2022, or upon earlier termination by the Company (“Relief Period”).

The Company has since repaid its $ 1.0 billion revolving credit facility.

During the fourth quarter of 2021, the Company renewed the credit agreement governing its $ 1.0 billion revolving credit facility and term loan B (“Second Amendment”).

The Second Amendment updated the terms and maturity date of the revolving credit facility, extending the maturity date to October 2026.

In addition, the Second Amendment terminated the Relief Period and restrictions regarding share repurchases, dividends, and acquisitions established by the First Amendment.

See Note 16— Debt for additional details.

Given the significant COVID-19 related events, the Company’s revenues were negatively impacted and while revenues are continuing to recover, not all product and service lines have yet reached pre-pandemic levels.

The Company reversed $ 61 million of COVID-19 charges for the year ended December 31, 2021, compared to $ 385 million of charges incurred in 2020.

The $ 385 million of charges incurred for the year ended December 31, 2020 included a $ 205 million COVID-19 related loan loss provision recorded as a result of the Company’s evaluation of the impact of COVID-19 on its owners’ ability to repay their vacation ownership contract receivables (“VOCRs”).

The $ 61 million of net reversals in 2021 included the release of $ 91 million of the COVID-19 related allowance for loan losses, as the Company has continued to experience improvements in net new defaults.

Refer to Note 26— COVID-19 Related Items for additional details.

Alliance Reservations Network Acquisition

On August 7, 2019, the Company acquired Alliance Reservations Network for $ 102 million ($ 97 million net of cash acquired).

ARN provides private-label travel booking technology solutions.

This acquisition was undertaken for the purpose of accelerating growth at Travel and Membership by increasing the offerings available to its members and affiliates.

ARN is reported within the Travel and Membership segment.

See Note 5— Acquisitions for additional details.

The results of operations for the years ended December 31, 2022, 2021, and 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”).

These COVID-19 impacts were significantly negative for the travel industry, the Company, its customers, and employees during the earlier stages of the pandemic, but had a substantially lower impact during 2022.

See Note 24— COVID-19 Related Items for additional details on the impact COVID-19 had on the Company.

Basis of Presentation

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directly or indirectly has a controlling financial interest.

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S.

The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

All intercompany balances and transactions have been eliminated in the Consolidated Financial Statements.

In addition, prior period segment results have been restated to reflect the aforementioned reclassification of the Extra Holidays business into the Travel and Membership segment.

In addition, prior period segment results have been updated to reflect the aforementioned reclassification of the Extra Holidays business into the Vacation Ownership segment.

The Company presents an unclassified balance sheet which conforms to that of the Company’s peers and industry practice.

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The largest portion of the Company’s restricted cash relates to securitizations.

The remaining portion is comprised of cash held in escrow accounts.

The remaining portion is comprised of escrow deposits and insurance funds on deposit.

Securitizations.

In accordance with the contractual requirements of the Company’s various VOCR securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization.

In accordance with the contractual requirements of the Company’s various vacation ownership contract receivables (“VOCR”) securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization.

At each month end, the total cash in the collection account from the previous month is analyzed and a monthly servicer report is prepared by the Company.

This report details how much cash should be remitted to the note holders for principal and interest

payments, and any cash remaining is transferred by the trustee to the Company.

This report details how much cash should be remitted to the note holders for principal and interest payments, and any cash remaining is transferred by the trustee to the Company.

Additionally, as required by various securitizations, the Company holds an agreed-upon percentage of the aggregate outstanding principal balances of the VOI contract receivables collateralizing the asset-backed notes in a segregated trust account as credit enhancement.

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Escrow Deposits.

Laws in most U.S.

states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires.

Laws in most United States (“U.S.”) states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires.

As sales transactions are consummated, down payments are collected and are subsequently placed in escrow until the rescission period has expired.

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Escrow deposits were $ 48 million and $ 42 million as of December 31, 2022 and 2021.

Funds on Deposit.

The Company operates a captive insurance company which provides property insurance to Travel + Leisure Co.

and its affiliates.

Amounts received are maintained by a third party and released from this account as necessary to pay claims.

Funds on deposit were $ 7 million and $ 2 million as of December 31, 2022 and 2021.

RECEIVABLE VALUATION

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When the Company determines that an account is not collectible, the account is written-off to the allowance for doubtful accounts.

The following table illustrates the Company’s allowance for doubtful accounts activity from continuing operations for the years ended December 31 (in millions):

The following table illustrates the Company’s allowance for doubtful accounts activity from continuing operations (in millions):

Year Ended December 31,

2022 2021 2020

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Write-offs ( 114 ) ( 149 ) ( 58 )

Translation and other adjustments — — 1

Ending balance $ 168 $ 199 $ 221

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The Company assesses the adequacy of the allowance for loan losses related to these VOIs using a technique referred to as a static pool analysis.

This analysis is based upon the historical performance of similar VOCRs and incorporates more recent history of default information.

This analysis is based upon the historical performance of similar VOCRs and

incorporates more recent history of default information.

Management prepares a model to track defaults for each year’s sales over the entire life of the contract receivable as a means to project future expected losses.

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If current or expected future conditions differ from the conditions in effect when the historical experience was generated, the Company adjusts the allowance for loan losses to reflect the expected effects of the current environment on the collectability of VOCRs.

Due to the economic disruption resulting from COVID-19, the Company estimated an additional loan loss allowance related to the impacts on its owners’ ability to repay their contract receivables.

Due to the economic disruption resulting from COVID-19, during 2020 the Company estimated an additional loan loss allowance related to the impacts on its owners’ ability to repay their contract receivables.

For additional details on the Company’s vacation ownership contract receivables, including information on the related allowances and the impact of COVID-19, see Note 9— Vacation Ownership Contract Receivables.

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The effect of such changes in estimates under the relative sales value method is accounted for in each period as a current-period adjustment to inventory and cost of sales.

Inventory is stated at the lower of cost, including

capitalized interest, property taxes, and certain other carrying costs incurred during the construction process, or estimated fair value less costs to sell.

There was no capitalized interest applied to inventory in 2021.

Capitalized interest related to inventory was less than $ 1 million during 2020 and $ 1 million and during 2019.

Inventory is stated at the lower of cost, including capitalized interest, property taxes, and certain other carrying costs incurred during the construction process, or estimated fair value less costs to sell.

There was no capitalized interest applied to inventory during 2022 and 2021.

Capitalized interest related to inventory was less than $ 1 million during 2020.

PROPERTY AND EQUIPMENT

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The net carrying value of software developed or obtained for internal use was $ 145 million and $ 156 million as of December 31, 2022 and 2021.

Capitalized interest was less than $ 1 million, $ 1 million, and $ 2 million during 2021, 2020, and 2019.

Capitalized interest was $ 1 million, less than $ 1 million, and $ 1 million during 2022, 2021, and 2020.

DERIVATIVE INSTRUMENTS

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ADVERTISING EXPENSE

Advertising costs are expensed in the period incurred and are recorded within Marketing expenses on the Consolidated Statements of Income/(Loss).

Advertising costs are expensed in the period incurred.

Advertising costs were $ 30 million, $ 33 million, and $ 26 million in 2022, 2021, and 2020.

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Goodwill and other intangible assets with indefinite lives are not subject to amortization.

However, goodwill and other intangibles with indefinite lives are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are reflected in Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

However, goodwill and other intangibles with indefinite lives are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are reflected in Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

The Company has goodwill recorded at reporting units comprising its Vacation Ownership and Travel and Membership reportable segments.

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The Company’s restructuring activities require it to make significant estimates in several areas including (i) expenses for severance and related benefit costs, (ii) the ability to generate sublease income, as well as its ability to terminate lease obligations, and (iii) contract terminations.

The amount that the Company accrued as of December 31, 2021, represents its best estimate of the obligations incurred in connection with these actions, but could change due to various factors including market conditions, the outcome of negotiations with third parties, or the effects of the COVID-19 pandemic.

During 2021, the Company recorded $ 6 million of other income primarily due to activity at the Travel and Membership segment including (i) an unrealized gain on Vacasa equity investment;

(ii) value added tax provision release;

and (iii) equity earnings.

During 2020, the Company recorded $ 14 million of other income primarily related to (i) settlements of various business interruption claims at its Vacation Ownership segment and (ii) value added tax provision releases at its Travel and Membership segment.

During 2019, the Company recorded $ 23 million of other income related to (i)

settlements of various business interruption claims, (ii) value added tax provision releases at its Travel and Membership segment, and (iii) equity earnings at its Travel and Membership segment.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The amount that the Company accrued as of December 31, 2022, represents its best estimate of the obligations incurred in connection with these actions, but could change due to various factors including market conditions or the outcome of negotiations with third parties.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Contract Assets and Contract Liabilities from Contracts with Customers Acquired in a Business Combination.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which requires companies to apply Accounting Standards Committee (“ASC”) 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

This creates an exception to the general recognition and measurement principle in ASC 805.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which requires companies to apply Accounting Standards Codification (“ASC”) 606 - Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

This creates an exception to the general recognition and measurement principle in ASC 805 - Business Combinations .

This generally will result in companies recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date.

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Early adoption is permitted.

As this guidance would only be applicable to future business combinations, the Company is currently unable to determine the impact of adopting this guidance.

The Company early adopted this guidance during 2022, and it did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Government Assistance.

In November 2021, the FASB issued guidance which requires business entities to provide certain disclosures when they (i) have received government assistance and (ii) use a grant or contribution accounting model by analogy to other accounting guidance.

The guidance is effective for fiscal years beginning after December 15, 2021.

The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Simplifying the Accounting for Income Taxes .

In December 2019, the FASB issued guidance to simplify the accounting for income taxes and clarify the financial statement presentation for tax benefits related to tax deductible dividends.

This guidance became effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

Reference Rate Reform .

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying generally accepted accounting principles in the U.S.

(“GAAP”) to contract modifications and hedging relationships, subject to meeting certain criteria that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

This guidance became effective as of March 12, 2020, and will apply through December 31, 2022.

The transition from LIBOR based benchmark rates is expected to begin January 1, 2022 and be completed when U.S.

Dollar (“USD”) LIBOR rates are phased out by June 30, 2023.

The Company adopted appropriate LIBOR replacement rate transition language into the agreements for the renewal of its USD bank conduit facility in 2020 and the renewal of the credit agreement governing the revolving credit facility and term loan B which closed during 2021.

These agreements represented the Company’s largest exposure to LIBOR.

In November 2021, FASB issued guidance which requires business entities to provide certain disclosures when they have received government assistance and used a grant or contribution accounting model by analogy to other accounting guidance.

The guidance became effective for financial statements issued for annual periods beginning after December 15, 2021.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements or related disclosures.

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Such agreements are generally for terms of one year or less and are renewed automatically on an annual basis.

The Company’s management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests.

The Company’s management agreements contain cancellation

clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests.

The Company receives fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities).

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Property management fee revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income/(Loss).

Property management revenues, which are comprised of management fee revenue and reimbursable revenue, for the years ended December 31, were (in millions) (a) :

Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were (in millions) (a) :

Year Ended December 31,

2022 2021 2020

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Property management revenues $ 763 $ 691 $ 595

(a) Reflects the impact of reclassifying the Extra Holidays business line from the Vacation Ownership segment to Travel and Membership.

(a) Reflects the impact of reclassifying the Extra Holidays business from the Travel and Membership segment to the Vacation Ownership segment.

One of the associations that the Company manages paid its Travel and Membership segment $ 31 million for exchange services during 2022, $ 30 million during 2021, and $ 27 million during 2020.

Travel and Membership

Travel and Membership derives a majority of its revenues from membership dues and fees for facilitating members’ trading of their intervals.

Travel and Membership derives a majority of its revenues from membership dues and fees for facilitating members’ trading of their timeshare intervals.

Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf.

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Estimated net contract consideration payable by affiliated clubs for memberships is recognized as revenue over the term of the contract with the affiliated club in proportion to the estimated average monthly member count.

Such estimates are adjusted periodically for changes in the actual and forecasted member activity.

Such estimates are adjusted periodically for changes in actual and forecasted member activity.

For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange networks and, for certain members, for other leisure-related services and products.

The Company also derives revenue from facilitating bookings of travel accommodations for both members and non-members.

Revenue is recognized when these transactions have been confirmed, net of expected cancellations, except in certain transactions where the Company has a performance obligation that is not satisfied until the time of stay.

The Company also derives revenue from facilitating bookings of travel accommodations for travel club members.

Revenue is recognized when these transactions have been confirmed, net of expected cancellations.

As a provider of vacation exchange services, the Company enters into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with the Company’s vacation exchange network and, for some members, for other leisure-related services and products.

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and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power.

Other vacation exchange-related product fees are deferred and recognized as revenue upon the occurrence of a future exchange, event, or other related transaction.

Revenues from other vacation exchange-related product fees are deferred and recognized upon the occurrence of a future exchange, event, or other related transaction.

The Company earns revenue from its RCI Elite Rewards co–branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders.

The advance payments received under the program are recognized as a contract liability until the Company’s performance obligations have been satisfied.

performance obligation for the program relates to brand performance services.

The primary performance obligation for the program relates to brand performance services.

Total contract consideration is estimated and recognized on a straight-line basis over the contract term.

Prior to the sale of the vacation rental businesses, the Company’s vacation rental brands derived revenue from fees associated with the rental of vacation properties managed and marketed by the Company on behalf of independent owners.

The Company remitted the rental fee received from the renter to the independent owner, net of the Company’s agreed-upon fee.

The related revenue from such fees, net of expected refunds, was recognized over the renter’s stay.

The Company’s vacation rental brands also derived revenues from additional services delivered to independent owners, vacation rental guests, and property owners’ associations which were generally recognized when the service was delivered.

The Company records property management services revenues for its Vacation Ownership segment and RCI Elite Rewards revenues for its Travel and Membership segments gross as a principal.

The Company records property management service revenues for its Vacation Ownership segment and RCI Elite Rewards revenues for its Travel and Membership segment gross as a principal.

Contract Liabilities

Contract liabilities generally represent payments or consideration received in advance for goods or services that the Company has not yet transferred to the customer.

Contract liabilities as of December 31, were as follows (in millions):

Contract liabilities consisted of (in millions):

As of December 31,

Deferred subscription revenue $ 164 $ 166

Deferred VOI trial package revenue 101 85

Deferred exchange-related revenue (a)

Deferred VOI incentive revenue 70 55

Deferred exchange-related revenue (a)

Deferred co-branded credit card programs revenue 9 12

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These amounts are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

In the Company’s Vacation Ownership business, deferred VOI trial package revenue represents consideration received in advance for a trial VOI, which allows customers to utilize a vacation package typically within one year of purchase.

Deferred VOI incentive revenue represents payments received in advance for additional travel-related services and products at the time of a VOI sale.

Revenue is recognized when a customer utilizes the additional services and products, which is typically within one year of the VOI sale.

Revenue is recognized when a customer utilizes the additional services and products, which is typically within one year of the VOI sale, but may extend longer for certain programs.

Within the Company’s Travel and Membership business, deferred subscription revenue represents billings and payments received in advance from members and affiliated clubs for memberships in the Company’s travel programs which are recognized in future periods.

Deferred revenue primarily represents payments received in advance from members for the right to access the Company’s vacation travel network to book vacation exchanges and rent travel accommodations which are recognized on a straight-line basis over the contract period, generally within one year .

Deferred revenue also includes other leisure-related services and products revenue which is recognized as customers utilize the associated benefits.

Changes in contract liabilities for the years ended December 31, follow (in millions):

Deferred revenue also includes other leisure-related service and product revenues which are recognized as customers utilize the associated benefits.

Changes in contract liabilities for the periods presented were as follows (in millions):

Year Ended December 31,

2022 2021 2020

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Such costs are capitalized and subsequently amortized over the utilization period, which is typically within one year of the sale.

As of December 31, 2021 and 2020, these capitalized costs were $ 28 million and $ 41 million;

and are included within Other assets on the Consolidated Balance Sheets.

As of December 31, 2022 and 2021, these capitalized costs were $ 35 million and $ 28 million and are included within Other assets on the Consolidated Balance Sheets.

The Travel and Membership segment incurs certain direct and incremental selling costs to obtain contracts with customers in connection with subscription revenues and exchange–related revenues.

Such costs, which are primarily comprised of commissions paid to internal and external parties and credit card processing fees, are deferred at the inception of the contract and recognized when the benefit is transferred to the customer.

As of December 31, 2021 and 2020, these capitalized costs were $ 19 million and $ 16 million;

and are included within Other assets on the Consolidated Balance Sheets.

As of December 31, 2022, these capitalized costs were $ 18 million, of which $ 11 million was included in Prepaid expenses and $ 7 million was included in Other assets on the Consolidated Balance Sheets.

As of December 31, 2021, these capitalized costs were $ 19 million, of which $ 11 million was included in Prepaid expenses and $ 8 million was included in Other assets on the Consolidated Balance Sheets.

Practical Expedients

The Company has not adjusted the consideration for the effects of a significant financing component if it expected, at contract inception, that the period between when the Company satisfied the performance obligation and when the customer paid for that good or service was one year or less.

The Company has not adjusted the consideration for the effects of a significant financing component if it expected, at contract inception, that the period between when the Company will satisfy the performance obligation and when the customer will pay for that good or service will be one year or less.

Performance Obligations

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VOI trial package revenue 94 3 2 2 101

Exchange-related revenue 56 4 1 — 61

VOI incentive revenue 70 — — — 70

Exchange-related revenue 50 3 — — 53

Co-branded credit card programs revenue 3 3 3 — 9

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Subscription revenues 184 176 160

Vacation rental revenues (c)

Ancillary revenues 32 35 76

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Corporate and other

Ancillary revenues — — 1

Eliminations ( 3 ) ( 3 ) ( 5 )

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Net revenues $ 3,567 $ 3,134 $ 2,160

(a) This table reflects the reclassification of Extra Holidays from the Vacation Ownership segment into the Travel and Membership segment for all periods presented.

Extra Holidays revenue is included within Transaction revenues.

(a) This table reflects the reclassification of the Extra Holidays business from the Travel and Membership segment into the Vacation Ownership segment for all periods presented.

The Extra Holidays business revenue is included within Property management fees and reimbursable revenues.

(b) The Company increased its loan loss allowance by $ 205 million during 2020, due to an expected increase in net new defaults driven by higher unemployment associated with COVID-19, which is reflected as a reduction to Vacation ownership interest sales on the Consolidated Statements of Income/(Loss).

During 2021, the Company analyzed the adequacy of this COVID-19 related allowance consistent with past methodology, resulting in releases of $ 91 million which is reflected as an increase in Vacation ownership interest sales on the Consolidated Statements of Income/(Loss).

During 2021, the Company analyzed the adequacy of this COVID-19 related allowance consistent with past methodology, resulting in the release of $ 91 million which is reflected as an increase in Vacation ownership interest sales on the Consolidated Statements of Income/(Loss).

Earnings/(Loss) Per Share

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shareholders $ 356 $ 313 $ ( 253 )

(Loss)/gain on disposal of discontinued business attributable to Travel + Leisure Co.

Gain/(loss) on disposal of discontinued business attributable to Travel + Leisure Co.

shareholders, net of income taxes 1 ( 5 ) ( 2 )

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Basic weighted average shares outstanding 83.4 86.5 86.1

Stock-settled appreciation rights (“SSARs”), RSUs (b) , PSUs (c) and NQs (d)

RSUs (b) , PSUs (c) and NQs (d)

Diluted weighted average shares outstanding (e)

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These PSUs could potentially dilute EPS in the future.

(d) Excludes 1.4 million, 2.1 million, and 1.2 million of outstanding non-qualified stock option (“NQs”) awards that would have been anti-dilutive to EPS for the years 2021, 2020, and 2019.

These outstanding stock option awards could potentially dilute EPS in the future.

(d) Excludes 1.6 million, 1.4 million, and 2.1 million of outstanding non-qualified stock options (“NQs”) that would have been anti-dilutive to EPS for the years 2022, 2021, and 2020.

These outstanding NQs could potentially dilute EPS in the future.

(e) The dilutive impact of the Company’s potential common stock is computed utilizing the treasury stock method using average market prices during the period.

(f) During 2021 the Company paid cash dividends of $ 0.30 per share for the first, second and third quarters, and $ 0.35 per share for the fourth quarter.

During 2020 the Company paid cash dividends of $ 0.50 per share for the first and second quarters, and $ 0.30 per share for the third and fourth quarters.

The Company paid cash dividends of $ 0.45 per share for all four quarters of 2019.

(f) During 2022, the Company paid cash dividends of $ 0.40 per share for all four quarters.

During 2021, the Company paid cash dividends of $ 0.30 per share for the first, second, and third quarters, and $ 0.35 per share for the fourth quarter.

The Company paid cash dividends of $ 0.50 per share for the first and second quarters, and $ 0.30 per share for the third and fourth quarters of 2020.

Share Repurchase Program

As of December 31, 2021, the total authorization under the Company’s current share repurchase program was $ 6.0 billion, of which $ 328 million remains available.

During 2022, the Company’s Board of Directors increased the authorization for the Company’s share repurchase program by $ 500 million.

Proceeds received from stock option exercises have increased the repurchase capacity by $ 81 million since the inception of this program.

In March 2020, the Company suspended its share repurchase activity due to the uncertainty resulting from COVID-19.

On July 15, 2020, the Company entered into the First Amendment to the credit agreement governing its revolving credit facility and term loan B.

This amendment placed the Company into a Relief Period from July 15, 2020 through April 1, 2022 that prohibited the use of cash for share repurchases during this period.

On October 22, 2021, the Company entered into the Second Amendment which renewed the credit agreement governing its revolving credit facility and term loan B, thereby terminating the Relief Period and

eliminating the Relief Period restrictions regarding share repurchases and dividends.

The Company resumed share repurchases during the fourth quarter of 2021.

As of December 31, 2022, the Company had $ 477 million of remaining availability under this program.

The following table summarizes stock repurchase activity under the current share repurchase program (in millions):

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2022 ACQUISITIONS

During the third quarter of 2022, the Company completed a business acquisition at its Travel and Membership segment for $ 2 million.

The preliminary purchase price allocations resulted in the recognition of (i) $ 1 million of definite lived intangibles with a weighted average life of seven years (ii) $ 1 million of goodwill;

and (iii) $ 1 million of deferred other revenue.

2021 ACQUISITIONS

Travel + Leisure.

On January 5, 2021, the Company acquired the Travel + Leisure brand from Meredith Corporation for $ 100 million, $ 55 million of which was paid in 2021.

These payments are reflected as $ 35 million of cash used in investing activities, along with the associated professional fees, and $ 20 million of cash used in financing activities on the Consolidated Statements of Cash Flows.

On January 5, 2021, the Company acquired the Travel + Leisure brand from Dotdash Meredith (formerly Meredith Corporation) for $ 100 million, $ 35 million of which was paid at closing and is reflected as cash used in Investing activities on the Consolidated Statements of Cash Flows.

The Company made additional payments of $ 20 million in each of 2021 and 2022, the majority of which is reflected as cash used in Financing activities on the Consolidated Statements of Cash Flows.

The remaining payments are to be completed by June 2024.

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Alliance Reservations Network .

On August 7, 2019, the Company acquired all of the equity of ARN.

ARN provides private-label travel booking technology solutions.

On August 7, 2019, the Company acquired all of the equity of Alliance Reservations Network (“ARN”).

ARN, which is reported within the Travel and Membership segment, provides private-label travel booking technology solutions.

This acquisition was undertaken for the purpose of accelerating growth at Travel and Membership by increasing the offerings available to its members and affiliates.

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The fair value of purchase consideration was comprised of:

(i) $ 48 million paid in cash at closing, which is included in cash used in investing activities on the Consolidated Statements of Cash Flows, net of cash received;

and $ 11 million paid in each of 2020 and 2021 included in cash used in financing activities on the Consolidated Statements of Cash Flows;

(i) $ 48 million paid in cash at closing and $ 11 million paid in each of 2020 and 2021;

(ii) $ 24 million of Travel + Leisure Co.

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and (iii) $ 10 million of contingent consideration based on achieving certain financial and operational metrics.

The Company recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values.

The determination of the fair values of the acquired assets and assumed liabilities, including goodwill and other intangible assets, requires significant judgment.

The purchase price allocation, including the impacts of certain post-closing adjustments, consists of:

(i) $ 27 million of developed software with a weighted average life of 10 years included within Property and equipment, net;

(ii) $ 38 million of Goodwill;

(iii) $ 35 million of definite-lived intangible assets with a weighted average life of 12 years primarily consisting of customer relationships;

and (iv) $ 4 million of Accounts payable.

All of the goodwill and other intangible assets are deductible for income tax purposes.

ARN is reported within the Travel and Membership segment.

The Company completed purchase accounting for this transaction during 2020.

Given the impact of COVID-19 on the industry, the Company performed assessments of the goodwill acquired as part of the ARN acquisition at October 1, 2021 and each interim period in 2020, including the annual assessment on October 1,

2020, and concluded at each assessment that the goodwill of ARN was not impaired.

For the assessment performed on October 1, 2021, it was determined that the fair value substantially exceeded the carrying value.

Although the Company determined that the goodwill of ARN was not impaired at these times, to the extent estimated discounted cash flows are revised downward, whether as a result of continued and worsening COVID-19 impacts or if management’s current negotiations to expand ARN programs both internally and externally do not materialize as expected, the Company may be required to write-down all or a portion of this goodwill, which would negatively impact earnings.

As a result of the impacts of COVID-19, the Company also performed an impairment analysis of ARN’s property and equipment and other intangible assets during each quarter of 2020, including the fourth quarter as part of its annual impairment analysis on October 1, 2020, and determined in all periods that it was more likely than not that these assets were not impaired.

The Company did not have any triggering events requiring an impairment test to be performed for these amortizing assets in 2021.

During 2019, the Company completed a business acquisition at its Vacation Ownership segment for $ 13 million ($ 10 million net of cash acquired).

The acquisition resulted in the recognition of (i) $ 4 million of Inventory, (ii) $ 7 million of definite-lived intangible assets, and (iii) $ 1 million of Accrued expenses and other liabilities.

During 2022, the Company reduced its accrual for contingent consideration by $ 10 million to reflect the fair value based on expected performance.

This amount was included within Other income, net on the Consolidated Statements of Income/(Loss).

Discontinued Operations

During 2018, the Company completed the spin-off of its hotel business (“Spin-off”) and the sale of its European vacation rentals business.

Subsequent to these transactions closing, the Company recognized additional gain and losses on disposal associated with these discontinued businesses.

During 2018, the Company completed the spin-off of its hotel business (“Spin-off”) Wyndham Hotels & Resorts, Inc.

(“Wyndham Hotels”) and the sale of its European vacation rentals business.

Prior to their classification as discontinued

operations, the hotel business comprised the Hotel Group segment and the European vacation rentals business was part of the Travel and Membership segment.

During 2022, the Company had $ 5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows which included $ 6 million related to the settlement of post-closing adjustment claims associated with the sale of the European vacation rentals business (see Note 27— Transactions with Former Parent and Former Subsidiaries for additional details) partially offset by $ 1 million of tax refunds related to various pre-sale tax items included in Gain/(loss) on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

During 2021, the Company recognized a loss on disposal of discontinued business, net of income taxes of $ 5 million as a result of entering into a settlement agreement for post-closing adjustment claims related to the sale of the European vacation rentals business.

See Note 27— Transactions with Former Parent and Former Subsidiaries for additional information.

During 2020, the Company recognized a $ 2 million loss on disposal of discontinued business, net of income taxes resulting from a tax audit related to the European vacation rentals business.

During 2019, the Company recognized an $ 18 million gain on disposal of discontinued business, net of income taxes.

This gain was related to $ 12 million of tax benefits associated with additional foreign tax credit utilization and lower than anticipated state income taxes, as well as $ 6 million in returned escrow deposits associated with expired guarantees related to the sale of the European vacation rentals business.

The Company does not expect to incur significant ongoing gains and losses for these discontinued operations.

Prior to their classification as discontinued operations, the hotel business comprised the Hotel Group segment and the European vacation rentals business was part of the Travel and Membership segment.

The following table presents information regarding components of cash flows from discontinued operations for the years ended December 31, (in millions):

2021 2020 2019

Cash flows used in operating activities $ — $ — $ ( 1 )

Cash flows used in investing activities — ( 5 ) ( 22 )

Held-for-Sale Business

During 2019, the Company closed on the sale of its North American vacation rentals business for $ 162 million.

After customary closing adjustments, the Company received $ 156 million in cash and $ 10 million in Vacasa LLC (“Vacasa”) equity, resulting in a gain of $ 68 million which is included in Gain on sale of business on the Consolidated Statements of Income/(Loss).

Prior to sale, this business was reported within the Travel and Membership segment.

During December 2021, Vacasa merged with a publicly traded special purpose acquisition company and began trading on the Nasdaq Global Select market.

As of December 31, 2021, the fair value of the Company’s investment in Vacasa was $ 13 million, as measured using quoted prices in the active market (Level 1);

representing an increase of $ 9 million during the year.

This increase is reflected as a $ 6 million recovery in Asset impairments/(recovery), and $ 3 million of Other income, net on the Consolidated Statements of Income/(Loss).

The Company had no cash flow activity related to discontinued operations during 2021.

During 2020, the Company recognized a $ 2 million loss on disposal of discontinued business, net of income taxes resulting from a tax audit related to the European vacation rentals business and had $ 5 million of Net cash used in investing activities from discontinued operations for the year ended December 31, 2020 associated with the sale of the European vacation rentals business.

The Company does not expect to incur significant ongoing gains and/or losses for the aforementioned discontinued operations.

Intangible Assets

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$ 142 $ 79 $ 63 $ 143 $ 70 $ 73

(a) Comprised of trademarks that the Company has acquired that are expected to generate future cash flows for an indefinite period of time.

(a) Comprised of trademarks and trade names the Company has acquired that are expected to generate future cash flows for an indefinite period of time.

During 2022, the Company recorded a $ 2 million trade name impairment at the Travel and Membership segment.

(b) Amortized between 4 to 15 years with a weighted average life of 12 years.

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During the fourth quarters of 2022, 2021, and 2020, the Company performed its annual goodwill impairment test and determined no impairment existed as the fair value of goodwill at its reporting units was in excess of the carrying value.

Due to the impacts of COVID-19, the Company also performed a qualitative analysis for each of its reporting units during each quarter of 2020.

Additionally, the Company performed quantitative assessments of the goodwill acquired as part of the ARN acquisition during the third and fourth quarters of 2020;

which resulted in the fair value exceeding the carrying value.

Based on the results of these qualitative and quantitative assessments, the Company determined that ARN’s goodwill was not impaired and that it was more likely than not that goodwill was not impaired at the Company’s other reporting units.

For the quantitative assessment performed on October 1, 2021 as part of the Company’s annual impairment analysis, it was determined that the fair value of the ARN goodwill substantially exceeded the carrying value.

The changes in the carrying amount of goodwill are as follows (in millions):

Balance as of December 31, 2020 Foreign Exchange Balance as of December 31, 2021

Balance as of December 31, 2021 Goodwill Acquired During 2022 Foreign Exchange Balance as of December 31, 2022

Travel and Membership $ 934 $ 1 $ ( 7 ) $ 928

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Amortization expense relating to amortizable intangible assets is included as a component of Depreciation and amortization on the Consolidated Statements of Income/(Loss) and was as follows (in millions):

Year Ended December 31,

2022 2021 2020

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Based on the Company’s amortizable intangible assets as of December 31, 2022, the Company expects related amortization expense for the next five years as follows (in millions):

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA”) was signed into law, which is the latest stimulus package to provide COVID-19 relief.

ARPA included an extension of the Coronavirus Aid, Relief, and Economic Security

(“CARES”) Act Employee Retention Tax Credit until December 31, 2021.

In addition to the expansion of the employee retention credit (among other provisions), ARPA includes several revenue-raising and business tax provisions.

One such provision that will impact the Company is the expansion of the limitation of compensation deductions above $ 1 million for certain covered employees of publicly held corporations.

Effective for taxable years after December 31, 2026, ARPA expands the limitation to include the next five highest compensated employees .

On March 27, 2020, the CARES Act was established to provide emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally support the U.S.

The CARES Act, among other things, included provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The Company recorded $ 2 million and $ 26 million of employee retention tax credits for the years ended December 31, 2021 and 2020, including credits from similar programs outside the U.S.

This provision of the CARES Act has no additional requirements or restrictions.

The Company has deferred social security payments and taken additional depreciation deductions relating to qualified improvement property.

The Company asserts that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2021.

In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes, as well as U.S.

taxes on currency transaction gains and losses, the determination of which is not practicable.

The income tax provision/(benefit) attributable to continuing operations consisted of the following for the years ended December 31 (in millions):

The income tax provision/(benefit) attributable to continuing operations consisted of the following (in millions):

Year Ended December 31,

2022 2021 2020

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Provision/(benefit) for income taxes $ 130 $ 116 $ ( 23 )

Pre-tax income/(loss) for domestic and foreign operations attributable to continuing operations consisted of the following for the years ended December 31 (in millions):

Pre-tax income/(loss) for domestic and foreign operations attributable to continuing operations consisted of the following (in millions):

Year Ended December 31,

2022 2021 2020

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Income/(loss) before income taxes $ 486 $ 429 $ ( 276 )

Deferred income tax assets and liabilities, as of December 31, were comprised of the following (in millions):

Deferred income tax assets and liabilities were comprised of the following (in millions):

As of December 31,

Deferred income tax assets:

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As of December 31, 2022, the Company’s net operating loss carryforwards primarily relate to state and foreign net operating losses of $ 17 million and $ 14 million.

The state net operating losses are due to expire at various dates, but no later than 2041.

The state net operating losses are due to expire at various dates, but no later than 2042 for those that cannot be carried forward indefinitely.

The majority of the foreign net operating losses can be carried forward indefinitely.

As of December 31, 2022, the Company had $ 69 million of foreign tax credits.

These foreign tax credits expire between 2022 and 2031.

These foreign tax credits expire between the 2022 and 2032 tax years.

The Company’s effective income tax rate differs from the U.S.

federal statutory rate as follows for the years ended December 31:

federal statutory rate as follows:

Year Ended December 31,

2022 2021 2020

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26.7 % 27.0 % 8.3 %

The effective income tax rate for 2021 differed from the statutory U.S.

Federal income tax rate of 21.0 % primarily due to the effect of state income taxes and the net increases in valuation allowances on the Company’s deferred tax assets.

The effective income tax rate for 2020 differed from the statutory U.S.

Federal income tax rate of 21.0 % primarily due to net increases in valuation allowances on the Company’s deferred tax assets.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):

Year Ended December 31,

2022 2021 2020

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Increases related to tax positions taken during the current period 2 2 2

Decreases related to settlements with taxing authorities — — ( 1 )

Decreases related to tax positions taken during a prior period ( 3 ) — ( 2 )

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Ending balance $ 25 $ 27 $ 26

The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $ 22 million, $ 22 million, and $ 24 million as of December 31, 2021, 2020, and 2019.

The Company accrued potential penalties and interest as a component of Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss) related to these unrecognized tax benefits of $ 1 million, $ 1 million, and $ 2 million during 2021, 2020, and 2019.

The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate were $ 20 million, $ 22 million, and $ 22 million as of December 31, 2022, 2021, and 2020.

The Company records potential penalties and interest as a component of Provision/(benefit) for income taxes on the Consolidated Statements of Income/(Loss) related to these unrecognized tax benefits.

During 2022, penalties and interest decreased by $ 1 million.

During 2021 and 2020 penalties and interest increased by $ 1 million in each respective year.

The Company had a liability for potential penalties of $ 4 million as of December 31, 2022, 2021, and 2020, and potential interest of $ 10 million, $ 11 million, and $ 10 million as of December 31, 2022, 2021, and 2020.

Such liabilities are reported as a component of Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The Company does not expect the unrecognized tax benefits balance to change significantly over the next 12 months.

The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $ 2 million within 12 months of the current reporting date due to the expiration of certain statutes of limitations.

The Company does not expect other changes to the unrecognized tax benefits balance to be significant.

The Company files U.S.

federal and state, and foreign income tax returns in jurisdictions with varying statutes of limitations.

The Company is currently under a U.S.

federal exam for the 2016 tax year and generally remains subject to examination by U.S.

federal tax authorities for tax years 2018 through 2021.

The 2012 through 2021 tax years generally remain subject to examination by many U.S.

state tax authorities.

In significant foreign jurisdictions, the 2014 through 2021 tax years generally remain subject to examination by their respective tax authorities.

The statutes of limitations are scheduled to expire within 12 months of the reporting date in certain taxing jurisdictions, and the Company believes that it is reasonably possible that the total amount of its unrecognized tax benefits could decrease by $ 2 million due to statute expirations.

With few exceptions, the Company is no longer subject to U.S.

federal income tax examinations for years prior to 2019 and state and local income tax examinations prior to 2016.

In significant foreign jurisdictions, generally years prior to 2015 are no longer subject to income tax examinations by their respective tax authorities.

The Company asserts that substantially all undistributed foreign earnings will be reinvested indefinitely as of December 31, 2022.

In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determina tion in the future could result in the accrual and payment of additional foreign withholding taxes, as well as U.S.

taxes on currency transaction gains and losses, the determination of which is not practicable.

The Company made cash income tax payments, net of refunds, of $ 153 million, $ 110 million, and $ 50 million during 2022, 2021, and 2020.

In addition, the Company made cash income tax payments, net of refunds, of $ 8 million and $ 39 million during 2020 and 2019 related to discontinued operations.

Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant and Wyndham Hotels & Resorts, Inc.

(“Wyndham Hotels”).

In addition, the Company made cash income tax payments, net of refunds, of $ 8 million during 2020 related to discontinued operations.

Such payments exclude income tax related payments made to or refunded by the Company’s former parent Cendant and Wyndham Hotels.

Vacation Ownership Contract Receivables

The Company generates VOCRs by extending financing to the purchasers of its VOIs.

As of December 31, Vacation ownership contract receivables, net consisted of (in millions):

Vacation ownership contract receivables, net consisted of the following (in millions):

As of December 31,

Vacation ownership contract receivables:

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Vacation ownership contract receivables, net $ 2,370 $ 2,309

(a) Excludes $ 17 million and $ 23 million of accrued interest on VOCRs as of December 31, 2021 and 2020, which are included in Trade receivables, net on the Consolidated Balance Sheets.

(a) Excludes $ 17 million of accrued interest on VOCRs as of both December 31, 2022 and 2021, which are included in Trade receivables, net on the Consolidated Balance Sheets.

(b) Excludes $ 7 million and $ 5 million of accrued interest on VOCRs as of December 31, 2022 and 2021, which are included in Trade receivables, net on the Consolidated Balance Sheets.

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Such interest income is included within Consumer financing revenue on the Consolidated Statements of Income/(Loss).

During 2021, 2020, and 2019, the Company had net VOCR originations of $ 780 million, $ 481 million, and $ 1.5 billion and received principal collections of $ 815 million, $ 718 million, and $ 937 million.

During 2022, 2021, and 2020, the Company had net VOCR originations of $ 1.14 billion, $ 780 million, and $ 481 million and received principal collections of $ 771 million, $ 815 million, and $ 718 million.

The weighted average interest rate on outstanding VOCRs was 14.6 %, 14.5 %, and 14.4 % during 2022, 2021, and 2020.

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Due to the economic downturn resulting from COVID-19 during the first quarter of 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of current and projected unemployment rates at that time, the Company recorded a COVID-19 related allowance for loan losses.

Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

The Company based its COVID-19 loan loss estimate upon historical data on the relationship between unemployment rates and net new defaults observed during the most recent recession in 2008.

This allowance consisted of a $ 225 million COVID-19 related provision, which was reflected as a reduction to Vacation ownership interest sales, and $ 55 million of estimated recoveries, which were reflected as a reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

During the fourth quarter of 2020, the Company updated its evaluation of the impact of COVID-19 on its owners’ ability to repay their contract receivables and, as a result of an improvement in net new defaults and lower than expected unemployment rates, reduced the provision by $ 20 million with a corresponding $ 7 million increase in Cost of vacation ownership interests.

The total impact of COVID-19 on the ability for owners’ to repay their contracts receivables for the year ended December 31, 2020, is reflected as a $ 205 million reduction to Vacation ownership interest sales and a $ 48 million reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

During 2021, the Company analyzed the adequacy of the COVID-19 related allowance consistent with past methodology, and due to improvement in net new defaults the Company reduced the allowance resulting in a $ 91 million increase to Vacation ownership interest sales and a corresponding $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

Estimating the amount of the COVID-19 related allowance involves the use of significant estimates and assumptions.

Since the time this allowance was established in March 2020, the Company has reversed $ 111 million of the initial $ 225 million provision.

After considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the Company has no COVID-19 related allowances as of December 31, 2021.

Since the first quarter of 2020, the Company has performed quarterly evaluations of the impact of COVID-19 on its owners’ ability to repay contract receivables and, as a result of improvements in net new defaults and lower than expected unemployment rates, reduced this allowance.

The total impact of COVID-19 on owners’ ability to repay contract receivables for the year ended December 31, 2020, is reflected as a $ 205 million reduction to Vacation ownership interest sales and a $ 48 million reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

During 2021 the Company released a portion of its COVID-19 related allowance which is reflected as a $ 91 million increase to Vacation ownership interest sales and a $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

After considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the Company has not had a COVID-19 related allowance since December 31, 2021.

The Company recorded net provisions for loan losses of $ 302 million and $ 129 million as a reduction of net revenues during the years ended December 31, 2022 and 2021, inclusive of the aforementioned COVID-19 related adjustments.

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FICO scores ranging from 700 to 850, from 600 to 699, below 600, no score (primarily comprised of consumers for whom a score is not readily available, including consumers declining access to FICO scores and non-U.S.

residents), and Asia Pacific (comprised of receivables in the Company’s Vacation Ownership Asia Pacific business for which scores are not readily available).

residents), and Asia Pacific (comprised of receivables in the Company’s Vacation Ownership Asia Pacific business for which scores are not available).

The following table details an aging analysis of financing receivables using the most recently updated FICO scores, based on the policy described above (in millions):

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$ 1,665 $ 782 $ 124 $ 77 $ 171 $ 2,819

(a) Includes contracts under temporary deferment (up to 180 days).

As of December 31, 2021 and 2020, contracts under deferment total $ 7 million and $ 37 million.

(a) Includes contracts under temporary deferment (up to 180 days) of $ 7 million as of December 31, 2021.

There were no contracts under temporary deferment as of December 31, 2022.

The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days and reverses all of the associated accrued interest recognized to date against interest income included within Consumer financing revenue on the Consolidated Statements of Income/(Loss).

At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses.

In accordance with its policy, the Company assesses the allowance for loan losses primarily using a static pool methodology and thus does not assess individual loans for impairment.

In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment.

The following table details the year of origination of financing receivables using the most recently updated FICO scores, based on the policy described above (in millions):

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Total $ 1,665 $ 782 $ 124 $ 77 $ 171 $ 2,819

Inventory, as of December 31, consisted of (in millions):

Inventory consisted of the following (in millions):

As of December 31,

Completed VOI inventory

$ 998 $ 1,049

Estimated VOI recoveries 192 187

VOI construction in process 14 13

Inventory sold subject to repurchase

Vacation exchange credits and other 4 4

Land held for VOI development 1 1

Inventory sold subject to repurchase

Total inventory $ 1,193 $ 1,216

The Company had net transfers of $ 75 million and $ 30 million of VOI inventory to property and equipment during 2021 and 2020.

As VOI inventory is completed it is transferred into property and equipment until such units are registered and made available for sale.

Once registered and available for sale, the units are then transferred back into completed inventory.

The Company had net transfers of VOI inventory to property and equipment of $ 19 million and $ 75 million during 2022 and 2021.

During 2020, as a result of resort closures and cancellations surrounding COVID-19, the Company recorded a $ 48 million reduction to exchange inventory consisting of costs previously incurred by RCI to provide enhanced out-of-network travel options to members.

The write-off was included within Operating expenses on the Consolidated Statements of Income/(Loss).

The Company anticipates that remaining inventory will be fully utilized to maximize exchange supply for its members in 2022 and beyond.

Inventory Sale Transactions

During 2020, the Company acquired properties in Orlando, Florida, and Moab, Utah, from third-party developers for vacation ownership inventory and property and equipment.

During 2013, the Company sold real property located in Las Vegas, Nevada, to a third-party developer, consisting of vacation ownership inventory and property and equipment.

The Company recognized no gain or loss on these sales transactions.

In accordance with the agreements with the third-party developers, the Company has conditional rights and conditional obligations to repurchase the completed properties from the developers subject to the properties conforming to the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party.

The Company utilized the remaining inventory to maximize exchange supply for its members.

Inventory Obligations

The Company has entered into inventory sale transactions with third-party developers for which the Company has conditional rights and obligations to repurchase the completed properties from the developers subject to the properties conforming to the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party.

Under the sale of real estate accounting guidance, the conditional rights and obligations of the Company constitute continuing involvement and thus the Company was unable to account for these transactions as a sale.

The following table summarizes the activity related to the Company’s inventory obligations (in millions):

Atlanta (a) (b)

Las Vegas (a)

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(a) Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

(b) Included in Accounts payable on the Consolidated Balance Sheets.

The Company has committed to repurchase the completed property located in Las Vegas, Nevada, from third-party developers subject to the property meeting the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the property to another party.

The maximum potential future payments that the Company may be required to make under these commitments was $ 65 million as of December 31, 2021.

(b) Represents vacation ownership inventory and property and equipment in Atlanta, Georgia, acquired from a third-party developer.

In connection with an inventory sale transaction, the Company has committed to repurchase completed property located in Las Vegas, Nevada, from a third-party developer.

The maximum potential future payments that the Company may be required to make under this commitment was $ 30 million as of December 31, 2022.

Property and Equipment, net

Property and equipment, net, as of December 31, consisted of (in millions):

Property and equipment, net consisted of the following (in millions):

As of December 31,

Capitalized software $ 724 $ 707

Building and leasehold improvements 653 591

Building and leasehold improvements (a)

Furniture, fixtures and equipment 192 204

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Property and equipment, net $ 658 $ 689

(a) Includes $ 242 million and $ 225 million of unregistered VOI inventory as of December 31, 2022 and 2021.

During 2022, 2021, and 2020, the Company recorded depreciation and amortization expense of $ 110 million, $ 115 million, and $ 117 million related to property and equipment.

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The majority of the Company’s leases have remaining lease terms of one to 20 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within one year .

The table below presents information related to the lease costs for finance and operating leases for the years ended December 31, (in millions):

The table below presents information related to the lease costs for finance and operating leases (in millions):

Year Ended December 31,

2022 2021 2020

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The table below presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets:

Balance Sheet Classification December 31, 2021 December 31, 2020

As of December 31,

Balance Sheet Classification 2022 2021

Operating Leases (in millions):

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(b) Upon adoption of the lease standard, discount rates used for existing leases were established at January 1, 2019.

The table below presents supplemental cash flow information related to leases for the years ended December 31, (in millions):

The table below presents supplemental cash flow information related to leases (in millions):

Year Ended December 31,

2022 2021 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 36 $ 36 $ 48

Operating cash flows from finance leases — — —

Financing cash flows from finance leases 4 4 2

Operating cash outflows from operating leases $ 32 $ 36 $ 36

Operating cash outflows from finance leases 1 — —

Financing cash outflows from finance leases 6 4 4

Right-of-use assets obtained in exchange for lease obligations:

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In 2020, the Company was also notified that Wyndham Hotels exercised its early termination rights under the sublease agreement for this building.

As a result, the Company recorded $ 22 million of restructuring charges associated with non-lease components of the office space and $ 24 million of impairment charges associated with the write-off of right-of-use assets and furniture, fixtures and equipment.

Additionally during 2020, the Company incurred $ 5 million of impairment charges related to right-of-use assets at closed sales centers within its Vacation Ownership segment, and $ 1 million of restructuring charges at each of the Vacation Ownership and corporate segments related to right-of-use assets at its corporate headquarters.

Subsequent to the Spin-off and in accordance with the Company’s decision to further reduce its corporate footprint, the Company focused on rationalizing existing facilities which included abandoning portions of its administrative offices in New Jersey.

As a result, during 2019 the Company recorded $ 12 million of non-cash impairment charges associated with the write-off of right-of-use assets and furniture, fixtures and equipment.

During 2019, the Company also entered into an early termination agreement for an operating lease in Chicago, Illinois, resulting in $ 6 million of non-cash impairment charges associated with the write-off of right-of-use assets, related lease liabilities, and furniture, fixtures and equipment.

These charges were offset by a $ 9 million indemnification receivable from Wyndham Hotels.

Such amounts are included within Separation and related costs on the Consolidated Statements of Income/(Loss).

Refer to Note 27— Impairments and Other Charges for additional information on the Company’s lease related impairments.

Other assets, as of December 31, consisted of (in millions):

Deferred costs $ 81 $ 90

Right-of-use assets 79 92

Other assets consisted of the following (in millions):

As of December 31,

Non-trade receivables, net $ 65 $ 57

Marketable securities 27 9

Right-of-use assets 62 79

Deferred costs 49 53

Capitalized contract costs (a)

Deferred tax asset 23 25

Investments 21 26

Deposits 22 20

Investments 18 21

Marketable securities 12 27

Derivatives 12 2

Tax receivables 3 5

(a) Includes certain direct and incremental selling costs in connection with VOI trial package, incentive, subscription, and exchange–related revenues.

See Note 3— Revenue Recognition for additional details.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities, as of December 31, consisted of (in millions):

Accrued expenses and other liabilities consisted of the following (in millions):

As of December 31,

Accrued payroll and related costs $ 214 $ 209

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Guarantees 68 67

Resort related obligations 54 39

Accrued interest 52 53

Deferred consideration 52 21

Resort related obligations 45 54

Payables associated with separation and sale of business activities 41 39

Accrued advertising and marketing 38 34

Inventory sale obligation (b)

Restructuring liabilities (c)

Deferred consideration 24 52

Accrued VOI maintenance fees 21 29

Restructuring liabilities (b)

Accrued legal and professional fees 21 21

Accrued legal settlements 19 13

Inventory sale obligation (c)

Derivative contract liabilities 13 1

Customer advances 12 10

Accrued separation costs — 7

COVID-19 liabilities (d)

Accrued legal settlements 3 19

Accrued other 77 74

(a) See Note 12— Leases for details.

(b) See Note 28— Restructuring for details.

(d) See Note 26— COVID-19 Related Items for details.

The Company’s indebtedness, as of December 31, consisted of (in millions):

(b) See Note 10— Inventory for details.

The Company’s indebtedness consisted of the following (in millions):

As of December 31,

Non-recourse vacation ownership debt :

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$ 1,545 $ 1,614

USD bank conduit facility (due October 2022) (c)

AUD/NZD bank conduit facility (due April 2023) (d)

USD bank conduit facility (due July 2024) (c)

AUD/NZD bank conduit facility (due December 2024) (d)

Total $ 1,973 $ 1,934

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$300 million secured term loan B (due May 2025) (g)

$250 million 5.625% secured notes (due March 2021) — 250

$650 million 4.25% secured notes (due March 2022) (h)

$300 million secured incremental term loan B (due December 2029) (h)

$400 million 3.90% secured notes (due March 2023) (i)

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These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $ 2.29 billion and $ 2.17 billion of underlying gross VOCRs and related assets (which legally are not assets of the Company) as of December 31, 2022 and 2021.

(b) The carrying amounts of the term notes are net of debt issuance costs of $ 18 million and $ 21 million as of December 31, 2021 and 2020.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than November 2023.

(d) The Company has a borrowing capacity of 250 million Australian dollars (“AUD”) and 48 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through April 2023.

Borrowings under this facility are required to be repaid no later than May 2025.

(b) The carrying amounts of the term notes are net of deferred financing costs of $ 18 million as of both December 31, 2022 and 2021.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize but no later than August 2025.

(d) The Company has a borrowing capacity of 200 million Australian dollars (“AUD”) and 25 million New Zealand dollars (“NZD”) under the AUD/NZD bank conduit facility through December 2024.

Borrowings under this facility are required to be repaid no later than January 2027.

(e) The carrying amounts of the secured notes and term loan are net of unamortized discounts of $ 23 million and $ 20 million as of December 31, 2022 and 2021, and net of unamortized debt financing costs of $ 10 million and $ 8 million as of December 31, 2022 and 2021.

(f) The weighted average effective interest rate on borrowings from this facility was 7.53 % and 3.19 % as of December 31, 2022 and 2021.

In late March 2020, the Company drew down its $ 1.0 billion secured revolving credit facility as a precautionary measure due to COVID-19.

As of December 31, 2021, these borrowings have been repaid.

(g) The weighted average effective interest rate on borrowings from this facility was 4.01 % and 2.39 % as of December 31, 2022 and 2021.

(h) Includes less than $ 1 million of unamortized gains from the settlement of a derivative as of December 31, 2020.

(i) Includes $ 2 million and $ 3 million of unamortized gains from the settlement of a derivative as of December 31, 2021 and 2020.

(h) The weighted average effective interest rate on borrowings from this facility was 8.24 % as of December 31, 2022.

(i) Includes less than $ 1 million and $ 2 million of unamortized gains from the settlement of a derivative as of December 31, 2022 and 2021.

(j) Includes $ 3 million and $ 4 million of unamortized losses from the settlement of a derivative as of December 31, 2022 and 2021.

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Maturities and Capacity

The Company’s outstanding debt as of December 31, 2021, matures as follows (in millions):

The Company’s outstanding indebtedness as of December 31, 2022, matures as follows (in millions):

Non-recourse Vacation Ownership Debt Debt Total

13 unchanged sentences

outstanding borrowings 428 —

Letters of credit — 2

Available capacity $ 324 $ 1,000

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Sierra Timeshare 2022-1 Receivables Funding, LLC.

On March 8, 2021, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2021-1 Receivables Fundings LLC, with an initial principal amount of $ 500 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 1.57 %.

On March 23, 2022, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2022-1 Receivables Funding LLC, with an initial principal amount of $ 275 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 3.84 %.

The advance rate for this transaction was 98 %.

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Sierra Timeshare 2022-2 Receivables Funding LLC.

On July 21, 2022, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2022-2 Receivables Funding LLC, with an initial principal amount of $ 275 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 5.7 %.

The advance rate for this transaction was 90.5 %.

As of December 31, 2022, the Company had $ 205 million of outstanding borrowings under these term notes, net of debt issuance costs.

Sierra Timeshare 2022-3 Receivables Funding LLC.

On October 20, 2022, the Company closed on a placement of a series of term notes payable, issued by Sierra Timeshare 2022-3 Receivables Funding LLC, with an initial principal amount of $ 250 million, secured by VOCRs and bearing interest at a weighted average coupon rate of 6.91 %.

4 unchanged sentences

USD bank conduit facility .

The Company has a non-recourse timeshare receivables conduit facility with a total capacity of $ 800 million and bearing interest based on variable commercial paper rates plus a spread or LIBOR (or a successor rate), plus a spread.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize, no later than November 2023.

On March 4, 2022, the Company renewed its USD timeshare receivables conduit facility, extending the end of the commitment period from October 2022 to July 2024.

The renewal included a reduction of the USD borrowing capacity from $ 800 million to $ 600 million.

This capacity reduction was made in an effort to reduce fees associated with unused capacity.

The facility bears interest based on a mixture of variable commercial paper rates plus a spread for certain participating banks and the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus a spread for other participating banks.

Borrowings under this facility are required to be repaid as the collateralized receivables amortize, no later than August 2025.

As of December 31, 2022, the Company had $ 321 million of outstanding borrowings under this facility.

AUD/NZD bank conduit facility.

On April 27, 2021, the Company renewed its AUD/NZD non-recourse timeshare receivables conduit facility, extending the commitment period from September 2021 to April 2023.

The renewal included a reduction of the AUD borrowing from A$ 255 million to A$ 250 million, while the NZD capacity remained unchanged at NZ$ 48 million.

On December 21, 2022, the Company renewed its AUD/NZD timeshare receivables conduit facility, extending the end of the commitment period from April 2023 to December 2024.

The renewal included a reduction of the AUD borrowing capacity from A$ 250 million to A$ 200 million and a reduction of the NZD borrowing capacity from NZ$ 48 million to NZ$ 25 million.

These capacity reductions were made in an effort to reduce fees associated with unused capacity.

The facility is secured by VOCRs and bears interest at variable rates based on the Bank Bill Swap Bid Rate plus 2.0 %.

Borrowings under this facility are required to be repaid no later than May 2025.

Borrowings under this facility are required to be repaid no later than January 2027.

As of December 31, 2022, the Company had $ 107 million of outstanding borrowings under this facility.

As of December 31, 2022, the Company’s non-recourse vacation ownership debt of $ 1.97 billion was collateralized by $ 2.29 billion of underlying gross VOCRs and related assets.

Additional usage of the capacity of the Company’s non-recourse bank conduit facilities are subject to the Company’s ability to provide additional assets to collateralize such facilities.

Additional usage of the Company’s non-recourse bank conduit facilities is subject to the Company’s ability to provide additional assets to collateralize such facilities.

The combined weighted average interest rate on the Company’s total non-recourse vacation ownership debt was 4.2 %, 4.0 %, and 4.2 % during 2022, 2021, and 2020.

$1.0 billion Revolving Credit Facility and $300 million Term Loan B.

In 2018, the Company entered into a credit agreement with Bank of America, N.A.

The Company has a credit agreement with Bank of America, N.A.

as administrative agent and collateral agent.

The agreement provided for senior secured credit facilities in the amount of $ 1.3 billion, consisting of the secured term loan B of $ 300 million maturing in 2025 and a secured revolving facility of $ 1.0 billion maturing in 2026.

On October 22, 2021, the Company entered the Second Amendment which renewed the credit agreement governing its $ 1.0 billion revolving credit facility and term loan B, extending the end of the commitment period of the revolving credit facility from May 2023 to October 2026.

The Second Amendment reestablished the annual interest rate pricing construct in existence prior to the First Amendment which is equal to, at the Company’s option, either a base rate plus a margin ranging from 0.75 % to 1.25 % or LIBOR plus a margin ranging from 1.75 % to 2.25 %, in either case based upon the Company’s first lien leverage ratio.

The interest rate per annum applicable to term loan B is equal to, at the Company’s option, either a base rate plus a margin of 1.25 % or LIBOR plus a margin of 2.25 %.

The Second Amendment also includes customary LIBOR transition language providing for alternate interest rate options upon the cessation of LIBOR publication.

As of December 31, 2021, the Company’s interest rate per annum applicable to term loan B and borrowings under the revolving credit facility was the applicable LIBOR based rate plus a margin of 2.25 %.

The agreement provides for senior secured credit facilities in the amount of $ 1.3 billion, consisting of the secured term loan B of $ 300 million maturing in 2025 and a secured revolving facility of $ 1.0 billion maturing in 2026.

As of December 31, 2022, the Company’s interest rate per annum applicable to term loan B is equal to, at the Company’s option, either a base rate plus a margin of 1.25 % or the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.25 %.

The interest rate per annum applicable to borrowings under the revolving credit facility is equal to, at the Company’s option, either a base rate plus a margin ranging from 0.75 % to 1.25 % or LIBOR plus a margin ranging from 1.75 % to 2.25 %, in either case based upon the first-lien leverage ratio of Travel + Leisure Co.

and its restricted subsidiaries.

The LIBOR rate with respect to either term loan B or the revolving credit facility borrowings are subject to a floor of 0.00 %.

The Company is also subject to a commitment fee for the unused portion of its revolving credit facility.

This fee is based upon the first-lien leverage ratio and ranges from 0.25 % to 0.35 % per annum of the unused balance.

As of December 31, 2022, the security agreement that exists in connection with the credit agreement names Bank of America N.A.

as collateral agent on behalf of the secured parties (as defined in the security agreement), and has been in force since May 31, 2018.

The security agreement grants a security interest in the collateral of the Company (as defined in the security agreement) and includes the holders of Travel + Leisure Co.'s 3.90 % notes due 2023, 5.65 % notes due 2024, 6.60 % notes due 2025, 6.625 % notes due 2026, 6.00 % notes due 2027, 4.50 % notes due 2029, and the 4.625 % notes due 2030, as “secured parties.” These noteholders share equally and ratably in the collateral (as defined in the security agreement) owned by the Company for so long as the indebtedness under the credit agreement is secured by such collateral.

The interest rates on the aforementioned notes reflect increases for those notes that were impacted by the rating agency downgrades of the Company’s corporate notes.

Pursuant to the terms of the indentures governing such rating sensitive series of notes, the interest rate on each such series of notes may be subject to future increases or decreases, as a result of future downgrades or upgrades to the credit ratings of such notes by Standard & Poor’s Rating Services (“S&P”), Moody’s Investors Services, Inc.

The security agreement grants a security interest in the collateral of the Company (as defined in the security agreement) and includes the holders of Travel + Leisure Co.'s outstanding secured notes, as “secured parties.” These noteholders share equally and ratably in the collateral (as defined in the security agreement) owned by the Company for so long as the indebtedness under the credit agreement is secured by such collateral.

The interest rates increased for certain of the outstanding secured notes that were impacted by the rating agency downgrades of the Company’s corporate notes.

Pursuant to the terms of the indentures governing such rating sensitive

series of notes, the interest rate on each such series of notes may be subject to future increases or decreases, as a result of future downgrades or upgrades to the credit ratings of such notes by Standard & Poor’s Rating Services (“S&P”), Moody’s Investors Service, Inc.

(“Moody’s”), or a substitute rating agency.

Since issuance, the interest rates on the impacted notes have increased 150 basis points as of December 31, 2022, with a maximum potential for additional increase of 50 basis points.

Secured Notes.

On November 18, 2021, the Company issued secured notes, with a face value of $ 650 million and an interest rate of 4.5 %, for net proceeds of $ 643 million.

Incremental Term Loan B.

On December 14, 2022, the Company amended the credit agreement governing its revolving credit facility and term loan B (“Third Amendment”).

The Third Amendment provides for an incremental term loan B of $ 300 million, which will mature on December 14, 2029.

The incremental term loan B bears interest, at the Company’s option, at a rate of (a) Base Rate (which is the highest of Bank of America’s prime rate, the federal funds rate plus 0.50 %, and the Term SOFR (as defined in the Company’s existing Credit Agreement) one month rate, inclusive of the SOFR Adjustment (defined as 0.10 % per annum in the Company’s Credit Agreement), plus 1.00 % (subject in each case to a floor of 0.50 %)), plus an applicable rate of 3.00 %, or (b) the Term SOFR rate, inclusive of the SOFR Adjustment, plus an applicable rate of 4.00 % (subject to a floor of 0.50 %).

The incremental term loan B amortizes in equal quarterly installments of 0.25 % of the initial principal amount, starting with the first full fiscal quarter after the closing date.

The incremental term loan B was issued with an original issue discount of 97.5 %.

Proceeds for the facility were $ 289 million, which were net of the discount, arrangement fees, and structuring fees.

Debt discount and deferred financing costs were collectively $ 12 million, which will be amortized over the life of the notes.

Interest is payable semi-annually in arrears.

The notes will mature on December 1, 2029, and are redeemable at the Company’s option at a redemption price equal to the greater of (i) the sum of the principal being redeemed, and (ii) a “make-whole” price specified in the indenture and the notes, plus, in each case, accrued and unpaid interest.

The net proceeds of this offering, together with cash on hand, was used to redeem all of the Company’s $ 650 million 4.25 % secured notes due March 2022, and to pay the related fees and expenses.

As of December 31, 2022, the Company had $ 3.08 billion of outstanding secured notes issued prior to December 31, 2021.

5 unchanged sentences

Such costs were $ 9 million and $ 10 million as of December 31, 2022 and 2021.

Fair Value Hedges

During 2017, the Company entered into pay-variable/receive-fixed interest rate swap agreements on its 6.00 % secured notes with notional amounts of $ 400 million.

The fixed interest rates on these notes were effectively modified to a variable LIBOR-based index.

During 2019, the Company terminated these swap agreements resulting in a gain of $ 13 million which will be amortized over the remaining life of the secured notes as a reduction to Interest expense on the Consolidated Statements of Income/(Loss).

The Company had $ 9 million and $ 11 million of deferred gains associated with this transaction as of December 31, 2021 and 2020, which are included within Debt on the Consolidated Balance Sheets.

During 2013, the Company entered into pay-variable/receive-fixed interest rate swap agreements on its 3.90 % and 4.25 % senior unsecured notes with notional amounts of $ 400 million and $ 100 million.

The fixed interest rates on these notes were effectively modified to a variable LIBOR-based index.

During 2015, the Company terminated the swap agreements resulting in a gain of $ 17 million, which is being amortized over the remaining life of the senior secured notes as a reduction to Interest expense on the Consolidated Statements of Income/(Loss).

The Company had $ 2 million and $ 4 million of deferred gains as of December 31, 2021 and 2020, which are included within Debt on the Consolidated Balance Sheets.

Debt Covenants

The revolving credit facilities and term loan B are subject to covenants including the maintenance of specific financial ratios as defined in the credit agreement.

The original financial ratio covenants consist of a minimum interest coverage ratio of no less than 2.5 to 1.0 as of the measurement date and a maximum first lien leverage ratio not to exceed 4.25 to 1.0 as of the measurement date.

The financial ratio covenants consist of a minimum interest coverage ratio of no less than 2.50 to 1.0 as of the measurement date and a maximum first lien leverage ratio not to exceed 4.25 to 1.0 as of the measurement date.

The interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12-month basis preceding the measurement date.

The first lien leverage ratio is calculated by dividing consolidated first lien debt (as defined in the credit agreement) as of the measurement date by consolidated EBITDA (as defined in the credit agreement) as measured on a trailing 12-month basis preceding the measurement date.

On July 15, 2020, the Company entered into the First Amendment to the Company’s credit agreement governing its revolving credit facility and term loan B.

The First Amendment established a Relief Period with respect to the Company’s secured revolving credit facility, which commenced on July 15, 2020, and was scheduled to end on April 1, 2022.

The First Amendment increased the existing leverage-based financial covenant of 4.25 to 1.0 by varying levels for each applicable quarter during the Relief Period.

Among other changes, the First Amendment increased the interest rate applicable to borrowings under the Company’s secured revolving credit facility utilizing a tiered pricing grid based on the Company’s first lien leverage ratio in any quarter it exceeded 4.25 to 1.0, until the end of the Relief Period;

added a new minimum liquidity covenant, tested quarterly until the end of the Relief Period, of (i) $ 250 million plus (ii) 50 % of the aggregate amount of dividends paid after the effective date of the First Amendment and on or prior to the last day of the relevant fiscal quarter;

and required the Company to maintain an interest coverage ratio (as defined in the credit agreement) of no less than 2.0 to 1.0.

The First Amendment amended the definition of “Material Adverse Effect” in the credit agreement to take into consideration the impacts of the COVID-19 pandemic during the Relief Period.

The Relief Period included certain restrictions on the use of cash including the prohibition of share repurchases.

Finally, the First Amendment limited the payout of dividends during the Relief Period to not exceed $ 0.50 per share, the rate in effect prior to the amendment.

Under the First Amendment to the credit agreement, if the first lien leverage ratio exceeded 4.25 to 1.0, the interest rate on revolver borrowings would increase, and the Company would be subject to higher fees associated with its letters of credit, both of which were based on a tiered pricing grid.

Given the first lien leverage ratio at December 31, 2020, the fees associated with letters of credit and the interest rate on the revolver borrowings increased 25 basis points effective March 1, 2021, until the Relief period was terminated by the Second Amendment on October 22, 2021.

The Second Amendment stipulated a first lien leverage ratio financial covenant not to exceed 4.75 to 1.0 commencing with the December 31, 2021 period through June 30, 2022, after which time it will return to 4.25 to 1.0, the level in existence prior to the effective date of the First Amendment.

The Second Amendment also increased the interest coverage ratio (as defined in the credit agreement) to no less than 2.5 to 1.0, the level existing prior to the effective date of the First

Amendment, and eliminated restrictions regarding share repurchases, dividends, acquisitions, and the Relief Period minimum liquidity covenant.

In connection with entering the Second Amendment, the Company resumed share repurchases during the fourth quarter of 2021.

The Second Amendment reestablished the tiered pricing grid that was in place prior to the First Amendment.

The interest rate on revolver borrowings and fees associated with letters of credit are subject to future changes based on the Company’s first lien leverage ratio which could serve to further reduce the interest rate if the ratio were to decrease to 3.75 to 1.0 or below.

During 2021, the Company renewed the credit agreement governing the revolving credit facilities and term loan B (“Second Amendment”).

The Second Amendment terminated the relief period restrictions adopted in the July 15, 2020 first amendment as a result of the COVID-19 pandemic.

Beginning in the third quarter of 2022, the Second Amendment returned the first lien leverage ratio financial covenant to not exceed 4.25 to 1.0 and reestablished the interest coverage ratio (as defined in the credit agreement) of no less than 2.50 to 1.0, the levels in place prior to COVID-19.

As of December 31, 2022, the Company’s interest coverage ratio was 4.83 to 1.0 and the first lien leverage ratio was 3.54 to 1.0.

5 unchanged sentences

Interest Expense

The Company incurred interest expense of $ 198 million during 2021, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of less than $ 1 million of capitalized interest.

Cash paid related to such interest was $ 207 million.

The Company incurred interest expense of $ 195 million during 2022, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of $ 1 million of capitalized interest.

Cash paid related to such interest was $ 189 million.

Cash paid related to such interest was $ 207 million.

The Company incurred interest expense of $ 192 million during 2020, consisting of interest on debt, excluding non-recourse vacation ownership debt, and including an offset of $ 1 million of capitalized interest.

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The assets and liabilities of these vacation ownership SPEs are as follows (in millions):

2021 December 31,

As of December 31,

Securitized contract receivables, gross (a)

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(e) Included in Non-recourse vacation ownership debt on the Consolidated Balance Sheets.

(f) Includes deferred financing costs of $ 18 million and $ 21 million as of December 31, 2021 and 2020, related to non-recourse debt.

(f) Includes deferred financing costs of $ 18 million as of both December 31, 2022 and 2021, related to non-recourse debt.

(g) Primarily includes accrued interest on non-recourse debt, which is included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

2 unchanged sentences

A summary of total vacation ownership receivables and other securitized assets, net of securitized liabilities and the allowance for loan losses, is as follows (in millions):

2021 December 31,

As of December 31,

SPE assets in excess of SPE liabilities $ 311 $ 230

2 unchanged sentences

Total, net $ 517 $ 478

Saint Thomas, U.S.

Virgin Islands Property

During 2015, the Company sold real property located in Saint Thomas, U.S.

Virgin Islands, to a third-party developer to construct VOI inventory through an SPE.

In accordance with the agreements with the third-party developer, the Company has conditional rights and conditional obligations to repurchase the completed property from the developer subject to the property conforming to the Company’s vacation ownership resort standards and provided that the third-party developer has not sold the property to another party.

As a result of a disruption to VOI sales caused by the impact of the hurricanes on Saint Thomas, U.S.

Virgin Islands, in 2017, there was a change in the economics of the transaction due to a reduction in the fair value of the assets of the SPE.

As such, during 2017, the Company was considered the primary beneficiary for specified assets and liabilities of the SPE, and therefore consolidated $ 64 million of Property and equipment, net and $ 104 million of Debt on its Consolidated Balance Sheets.

As a result of this consolidation, the Company incurred a non-cash $ 37 million loss due to the write-down of property and equipment to fair value.

During 2019, the Company made its final purchase of VOI inventory from the SPE and the debt was extinguished.

The SPEs conveyed no property and equipment to the Company during either 2021 or 2020.

The Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values.

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See Note 18— Financial Instruments for additional details.

As of December 31, 2021, the Company had foreign exchange contracts resulting in $ 1 million of assets which are included within Other assets and less than $ 1 million of liabilities which are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

As of December 31, 2022, the Company had foreign exchange contracts resulting in less than $ 1 million of assets which are included within Other assets and $ 1 million of liabilities which are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

On a recurring basis, such assets and liabilities are remeasured at estimated fair value (all of which are Level 2) and thus are equal to the carrying value.

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In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate.

The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities.

The carrying amounts of cash

and cash equivalents, restricted cash, trade receivables, accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities.

The carrying amounts and estimated fair values of all other financial instruments were as follows (in millions):

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The Company estimates the fair value of its debt, excluding finance leases, using Level 2 inputs based on indicative bids from investment banks and determines the fair value of its secured notes using quoted market prices (such secured notes are not actively traded).

During 2019, the Company closed on the sale of its North American vacation rentals business for $ 162 million.

After customary closing adjustments, the Company received $ 156 million in cash and $ 10 million in Vacasa LLC (“Vacasa”) equity.

During the fourth quarter of 2021, Vacasa merged with a publicly traded special purpose acquisition company and began trading on the Nasdaq Global Select market.

As of December 31, 2021, the fair value of the Company’s investment in Vacasa was $ 13 million, as measured using quoted prices in the active market (Level 1);

representing an increase of $ 9 million during 2021 which was reflected as a $ 6 million recovery within Asset impairments/(recoveries), net, and $ 3 million of Other income, net on the Consolidated Statements of Income/(Loss).

During 2022, the Company sold all of its equity in Vacasa for $ 8 million resulting in a $ 5 million loss, which was included within Other income, net on the Consolidated Statements of Income/(Loss).

Financial Instruments

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Foreign Currency Risk

The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso.

The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the Euro, British pound sterling, Australian and Canadian dollars, Danish krone, and Mexican peso.

The Company uses freestanding foreign currency forward contracts to manage a portion of its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables, payables, and forecasted earnings of foreign subsidiaries.

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There were no losses on derivatives recognized in AOCL for the years ended December 31, 2022, 2021, or 2020.

The following table summarizes information regarding the gains recognized in income on the Company’s freestanding derivatives for the years ended December 31 (in millions):

The following table summarizes information regarding the gains recognized in income on the Company’s freestanding derivatives (in millions):

Year Ended December 31,

2022 2021 2020

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With the exception of the financing provided to customers of its vacation ownership businesses, the Company does not normally require collateral or other security to support credit sales.

The Company is subject to risks relating to the geographic concentrations of (i) areas in which the Company is currently developing and selling vacation ownership properties, (ii) sales offices in certain vacation areas, and (iii) customers of the Company’s vacation ownership business, which in each case, may result in the Company’s results of operations being more sensitive to local and regional economic conditions and other factors, including competition, extreme weather conditions and other natural disasters, and economic downturns, than the Company’s results of operations would be, absent such geographic concentrations.

Company’s vacation ownership business, which in each case, may result in the Company’s results of operations being more sensitive to local and regional economic conditions and other factors, including competition, extreme weather conditions and other natural disasters, and economic downturns, than the Company’s results of operations would be, absent such geographic concentrations.

Local and regional economic conditions and other factors may differ materially from prevailing conditions in other parts of the world.

Florida and Nevada are examples of areas with concentrations of sales offices.

For the year ended December 31, 2021, 15 % of the Company’s VOI sales revenues were generated in sales offices located in Florida and 15 % in Nevada.

Included within the Consolidated Statements of Income/(Loss) are net revenues generated from transactions in the state of Florida of 15 %, 18 %, and 19 % during 2021, 2020, and 2019;

net revenues generated from transactions in California of 10 %, 12 %, and 11 %;

and net revenues generated from transactions in the state of Nevada of 10 %, 6 %, and 9 %.

Nevada, Florida, and California are examples of areas with concentrations of sales offices.

For the year ended December 31, 2022, the Company generated 15 %, 15 %, and 11 % of its VOI sales revenues in sales offices located in Nevada, Florida, and California.

Included within the Consolidated Statements of Income/(Loss) are net revenues generated in the state of Florida of 15 %, 15 %, and 18 % during 2022, 2021, and 2020;

net revenues generated in Nevada of 11 %, 10 %, and 6 %;

and net revenues generated in California of 9 %, 10 %, and 12 % during these periods.

Commitments and Contingencies

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In the normal course of business, the Company makes various commitments to purchase goods or services from specific suppliers, including those related to vacation ownership resort development and other capital expenditures.

Purchase commitments made by the Company as of December 31, 2021, aggregated to $ 826 million, of which $ 656 million were for marketing-related activities, $ 61 million were related to the development of vacation ownership properties, and $ 45 million were for information technology activities.

Purchase commitments made by the Company as of December 31, 2022, aggregated to $ 762 million, of which $ 575 million were for marketing-related activities and $ 112 million were for information technology activities.

Inventory Sold Subject to Conditional Repurchase

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Letters of Credit

As of December 31, 2021, the Company had $ 36 million of irrevocable standby letters of credit outstanding, of which $ 2 million were under its revolving credit facilities.

As of December 31, 2022, the Company had $ 34 million of irrevocable standby letters of credit outstanding, none of which were under its revolving credit facilities.

As of December 31, 2021, the Company had $ 36 million of irrevocable standby letters of credit outstanding, of which $ 2 million were under its revolving credit facilities.

Such letters of credit issued during 2020 included a $ 48 million letter of credit for guarantees related to the sale of the European vacation rentals business for which Wyndham Hotels and Travel + Leisure Co.

are required to maintain certain credit ratings.

This letter of credit was released during 2021, see Note 29— Transactions with Former Parent and Former Subsidiaries for additional details.

The letters of credit issued during 2022 and 2021 also supported the securitization of VOCR fundings, certain insurance policies, and development activity at the Company’s Vacation Ownership segment.

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The Company believes that it has adequately accrued for such matters with reserves of $ 3 million and $ 19 million as of December 31, 2022 and 2021.

Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses

in these matters, unfavorable results could occur.

Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur.

As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period.

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For matters deemed reasonably possible, therefore not requiring accrual, the Company believes that such matters will not have a material effect on its results of operations, financial position or cash flows based on information currently available.

As of December 31, 2021, it is estimated that the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to an amount less than $ 1 million.

G UARANTEES /I NDEMNIFICATIONS

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Such underlying agreements are typically entered into by one of the Company’s subsidiaries.

The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, access to credit facilities, derivatives and issuances of debt securities.

The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, customer data safeguards, access to credit facilities, derivatives and issuances of debt securities.

Also in the ordinary course of business, the Company provides corporate guarantees for its operating business units relating to merchant credit-card processing for prepaid customer stays and other deposits.

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The Company is not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable.

In certain cases, the Company maintains insurance coverage that may mitigate any potential payments.

In certain cases, the Company receives offsetting indemnifications from third-parties and/or maintains insurance coverage that may mitigate any potential payments.

Other Guarantees and Indemnifications

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In connection with the Company’s vacation ownership inventory sale transactions, for which it has conditional rights and conditional obligations to repurchase the completed properties, the Company was required to maintain an investment-grade credit rating from at least one rating agency.

As a result of the Spin-off, the Company failed to maintain an investment-grade credit rating with at least one rating agency, which triggered a default.

See Note 27— Transactions with Former Parent and Former Subsidiaries for additional details.

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Balance as of December 31, 2019 $ ( 148 ) $ ( 1 ) $ 1 $ ( 148 )

Other comprehensive loss before reclassifications ( 1 ) — ( 1 ) ( 2 )

Amount reclassified to earnings — 1 — 1

Other comprehensive income/(loss) 35 — ( 1 ) 34

Balance as of December 31, 2020 ( 113 ) ( 1 ) — ( 114 )

Other comprehensive income/(loss) before reclassifications 35 — ( 1 ) 34

Other comprehensive income/(loss) ( 32 ) — — ( 32 )

Balance as of December 31, 2021 ( 145 ) ( 1 ) — ( 146 )

Other comprehensive loss before reclassifications ( 32 ) — — ( 32 )

Other comprehensive income/(loss) ( 33 ) 1 — ( 32 )

Balance as of December 31, 2022 $ ( 178 ) $ — $ — $ ( 178 )

1 unchanged sentence

Balance as of December 31, 2019 $ 95 $ 1 $ — $ 96

Other comprehensive income/(loss) before reclassifications 1 ( 1 ) 1 1

Other comprehensive income/(loss) 2 — — 2

Balance as of December 31, 2020 97 1 — 98

Other comprehensive income before reclassifications 2 — — 2

Other comprehensive income/(loss) — — — —

Balance as of December 31, 2021 97 1 — 98

Other comprehensive income before reclassifications — — — —

Other comprehensive income/(loss) 2 ( 1 ) — 1

Balance as of December 31, 2022 $ 99 $ — $ — $ 99

1 unchanged sentence

Balance as of December 31, 2019 $ ( 53 ) $ — $ 1 $ ( 52 )

Other comprehensive loss before reclassification — ( 1 ) — ( 1 )

Amount reclassified to earnings — 1 — 1

Other comprehensive income/(loss) 37 — ( 1 ) 36

Balance as of December 31, 2020 ( 16 ) — — ( 16 )

Other comprehensive income/(loss) before reclassifications 37 — ( 1 ) 36

Other comprehensive income/(loss) ( 32 ) — — ( 32 )

Balance as of December 31, 2021 ( 48 ) — — ( 48 )

Other comprehensive loss before reclassifications ( 32 ) — — ( 32 )

Other comprehensive income/(loss) ( 31 ) — — ( 31 )

Balance as of December 31, 2022 $ ( 79 ) $ — $ — $ ( 79 )

Currency translation adjustments exclude income taxes related to investments in foreign subsidiaries where the Company intends to reinvest the undistributed earnings indefinitely in those foreign operations.

There were no reclassifications out of AOCL during 2021 and 2020.

The Company's policy for releasing disproportionate income tax effects from AOCL utilizes the aggregate approach.

There were no reclassifications out of AOCL during 2022 or 2021.

Stock-Based Compensation

The Company has a stock-based compensation plan available to grant RSUs, PSUs, SSARs, NQs, and other stock-based awards to key employees, non-employee directors, advisors, and consultants.

The Company has a stock-based compensation plan available to grant RSUs, PSUs, stock-settled appreciation rights, NQs, and other stock-based awards to key employees, non-employee directors, advisors, and consultants.

The Wyndham Worldwide Corporation 2006 Equity and Incentive Plan was originally adopted in 2006 and was amended and restated in its entirety and approved by shareholders on May 17, 2018, (the “Amended and Restated Equity Incentive Plan”).

2 unchanged sentences

Incentive Equity Awards Granted by the Company

During the year ended December 31, 2021, the Company granted incentive equity awards to key employees and senior officers totaling $ 35 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 2 million in the form of stock options.

Of these awards, the majority of RSUs and NQs will vest ratably over a period of four years .

The PSUs will cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics.

During the year ended December 31, 2020, the Company granted incentive equity awards totaling $ 35 million in the form of RSUs, $ 8 million in the form of PSUs, and $ 8 million in the form of stock options.

During 2019, the Company granted incentive equity awards totaling $ 26 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 5 million in the form of stock options.

The activity related to incentive equity awards granted to the Company’s key employees and senior officers by the Company for the year ended December 31, 2021, consisted of the following (in millions, except grant prices):

During the year ended December 31, 2022, the Company granted incentive equity awards to key employees and senior officers of $ 34 million in the form of RSUs and $ 13 million in the form of PSUs.

Of these awards, the majority of RSUs will vest ratably over a period of four years .

The majority of PSUs will cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics.

During the year ended December 31, 2021, the Company granted incentive equity awards of $ 35 million in the form of RSUs, $ 7 million in the form of PSUs, and $ 2 million in the form of stock options.

During 2020, the Company granted incentive equity awards of $ 35 million in the form of RSUs, $ 8 million in the form of PSUs, and $ 8 million in the form of stock options.

The activity related to incentive equity awards granted by the Company to key employees and senior officers for the year ended December 31, 2022, consisted of the following (in millions, except grant prices):

Balance as of December 31, 2021 Granted Vested/Exercised (a)

Forfeitures (b)

Cancelled / Forfeited (b)

Balance as of December 31, 2022

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Weighted average grant price $ 48.18 $ 52.87 $ — $ 45.11 $ 51.26

Number of SSARs 0.2 — ( 0.2 ) — — (e)

Weighted average grant price $ 34.51 $ — $ 34.51 $ — $ —

Number of NQs 2.3 0.1 ( 0.1 ) — 2.3 (f)

Number of NQs 2.3 — — — 2.3 (e)

Weighted average grant price $ 45.32 $ — $ — $ — $ 45.36

(a) Upon exercise of NQs and SSARs and upon vesting of RSUs and PSUs, the Company issues new shares to participants.

(b) The Company recognizes forfeitures as they occur.

(a) Upon exercise of NQs and vesting of RSUs and PSUs, the Company issues new shares to participants.

(b) The Company recognizes cancellations and forfeitures as they occur.

(c) Aggregate unrecognized compensation expense related to RSUs was $ 50 million as of December 31, 2022, which is expected to be recognized over a weighted average period of 2.5 years.

(d) There was no unrecognized compensation expense related to PSUs as these awards were not probable of vesting as of December 31, 2021.

The maximum amount of compensation expense associated with these awards would be $ 8 million which would be recognized over a weighted average period of 2.0 years.

(e) A s of December 31, 2021, all SSARs had been exercised;

therefore there was no unrecognized compensation expense.

(f) There were 0.9 million NQs which were exercisable as of December 31, 2021.

(d) Aggregate unrecognized compensation expense related to PSUs that are probable of vesting was $ 14 million as of December 31, 2022, which is expected to be recognized over a weighted average period of 2.0 years.

The maximum amount of compensation expense associated with PSUs that are not probable of vesting could range up to $ 20 million which would be recognized over a weighted average period of 1.3 years.

(e) There were 1.4 million NQs which were exercisable as of December 31, 2022.

These NQs will expire over a weighted average period of 6.1 years and carry a weighted average grant date fair value of $ 8.52 .

Unrecognized compensation expense for the NQs was $ 4 million as of December 31, 2022, which is expected to be recognized over a weighted average period of 1.7 years.

The Company did not grant any stock options during 2022.

The fair value of stock options granted by the Company during 2021 and 2020 were estimated on the dates of these grants using the Black-Scholes option-pricing model with the relevant weighted average assumptions outlined in the table below.

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Expected life (a)

6.25 years 6.25 - 7.50 years 6.25 years

6.25 years 6.25 - 7.50 years

Risk-free interest rate 1.09 % 0.95 % - 1.03 %

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(a) The maximum contractual term for these options is 10 years.

The total intrinsic value of exercised options during 2021 were $ 1 million.

There were no options exercised during 2020 or 2019.

The fair value of vested options during 2021, 2020, and 2019 were $ 6 million, $ 3 million, and $ 1 million.

The total intrinsic value of exercised options were less than $ 1 million and $ 1 million during 2022 and 2021.

There were no options exercised during 2020.

The fair value of shares that vested during 2022, 2021, and 2020 were $ 33 million, $ 33 million, and $ 12 million.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense of $ 45 million, $ 32 million, and $ 20 million during 2022, 2021, and 2020, related to the incentive equity awards granted to key employees, senior officers, and non-employee directors.

Stock-based compensation expense for 2019 included $ 4 million of expense which has been classified within Separation and related costs in continuing operations on the Consolidated Statements of Income/(Loss).

During 2022, such stock-based compensation expense includes $ 3 million which has been classified within Restructuring on the Consolidated Statements of Income/(Loss).

The Company recognized $ 12 million, $ 9 million, and $ 2 million of associated tax benefits during 2022, 2021, and 2020.

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The Company has an employee stock purchase plan which allows eligible employees to purchase common shares of Company stock through payroll deductions at a 10 % discount from the fair market value at the grant date.

The Company issued 0.1 million, 0.2 million, and 0.2 million shares during 2021, 2020, and 2019 and recognized $ 1 million of compensation expense related to the grants under this plan in each period.

The Company issued 0.3 million, 0.1 million, and 0.2 million shares during 2022, 2021, and 2020 and recognized $ 1 million of compensation expense related to grants under this plan in each period.

The value of shares issued under this plan was $ 9 million, $ 8 million, and $ 7 million during 2022, 2021, and 2020.

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Defined Benefit Pension Plans

The Company sponsors defined benefit pension plans for certain foreign subsidiaries, which were primarily part of the Company’s European vacation rentals business, which is presented as discontinued operations.

The Company sponsors defined benefit pension plans for certain foreign subsidiaries.

Under these plans, benefits are based on an employee’s years of credited service and a percentage of final average compensation or as otherwise described by the plan.

The Company had $ 4 million and $ 5 million of net pension liability as of December 31, 2021 and

2020, included within Accrued expenses and other liabilities.

As of December 31, 2021 and 2020, the Company had less than $ 1 million of unrecognized gains included within Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The Company had $ 5 million and $ 4 million of net pension liability as of December 31, 2022 and 2021, included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The Company had no unrecognized gains as of December 31, 2022 and less than $ 1 million of unrecognized gains as of December 31, 2021 included within Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The Company’s policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws and additional amounts that the Company determines to be appropriate.

The Company recognized no pension expense related to these plans during 2021, 2020, and 2019.

The Company recognized no pension expense related to these plans during 2022, 2021, or 2020.

Segment Information

1 unchanged sentence

Vacation Ownership and Travel and Membership.

In connection with the Travel + Leisure brand acquisition the Company updated the names and composition of its segments to better align with how the segments are managed.

The Vacation Ownership segment develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.

With the formation of the Travel + Leisure Group the Company decided that the operations of its Extra Holidays business, which focuses on direct-to-consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of the Extra Holidays business to the Travel and Membership segment.

As such, the Company reclassified the results of its Extra Holidays business, which was previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

This change is reflected in all periods reported.

During 2019, the Company sold its North American vacation rentals business, which was part of its Travel and Membership segment.

This business did not meet the criteria to be classified as a discontinued operation;

therefore, the results of operations through the date of sale are included in the 2019 results presented in the tables below.

Due to changes in organizational structure in the second quarter of 2022, the management of the Extra Holidays business was transitioned to the Vacation Ownership segment.

As such, the Company reclassified the results of the Extra Holidays business, which was previously reported within the Travel and Membership segment, into the Vacation Ownership segment.

Prior period segment information has been updated to reflect this change.

The reportable segments presented below are those for which discrete financial information is available and which are utilized on a regular basis by the chief operating decision maker to assess performance and to allocate resources.

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Adjusted EBITDA is defined by the Company as Net income/(loss) from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, asset impairments/recoveries, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and Cendant, and the sale of the vacation rentals businesses.

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shareholders $ 357 $ 308 $ ( 255 )

Loss/(gain) on disposal of discontinued business, net of income taxes 5 2 ( 18 )

(Gain)/loss on disposal of discontinued business, net of income taxes ( 1 ) 5 2

Provision/(benefit) for income taxes 130 116 ( 23 )

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Interest (income) ( 6 ) ( 3 ) ( 7 )

Gain on sale of business — — ( 68 )

Stock-based compensation 42 32 20

Restructuring (b)

Asset impairments/(recoveries), net (c)

Loss/(gain) on equity investment 5 ( 3 ) —

COVID-19 related costs (d)

Legacy items 1 4 4

COVID-19 related costs (b)

Exchange inventory write-off — — 48

Acquisition and divestiture related costs — — 1

Separation and related costs (c)

Restructuring ( 1 ) 39 9

Unrealized gain on equity investment (d)

Asset impairments/(recovery) (e)

Fair value change in contingent consideration ( 10 ) — —

Adjusted EBITDA $ 859 $ 778 $ 259

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(a) Includes the elimination of transactions between segments.

(b) Reflects severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by employee retention credits received in connection with the U.S.

CARES Act, ARPA, and similar international programs for wages paid to certain employees despite having operations suspended.

This amount does not include costs associated with idle pay.

(d) Represents the unrealized gain associated with Vacasa equity acquired as part of the consideration for the sale of North America vacation rentals.

The total amount of unrealized gain on this investment was $ 9 million for the year ended December 31, 2021, of which $ 6 million is included in Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss) to offset the 2020 impairment recognized on this investment.

(e) Includes $ 5 million of bad debt expense related to a note receivable for the year ended December 31, 2020, included in Operating expenses on the Consolidated Statements of Income/(Loss).

Year Ended December 31,

(b) Includes $ 3 million of stock-based compensation expense for the year ended December 31, 2022 associated with the 2022 restructuring plans.

(c) Includes $ 1 million of inventory impairments for the year ended December 31, 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

Includes $ 5 million of bad debt expense related to a note receivable for the year ended December 31, 2020, included in Operating expenses on the Consolidated Statements of Income/(Loss).

(d) Includes expenses related to COVID-19 testing and other expenses associated with the Company’s return-to-work program in 2022.

In 2021 and 2020, this includes severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by U.S.

and international government employee retention credits.

As of December 31,

Segment Assets (a)

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The geographic segment information provided below is classified based on the geographic location of the Company’s subsidiaries (in millions):

Year Ended December 31, Year Ended December 31,

Net Revenues Net Long-lived Assets

Year Ended December 31, As of December 31,

2022 2021 2020 2022 2021

2 unchanged sentences

Total $ 3,567 $ 3,134 $ 2,160 $ 1,820 $ 1,869

Separation and Transaction Costs

During 2019, the Company incurred $ 45 million of expenses in connection with the Spin-off completed on May 31, 2018, which are reflected within continuing operations.

These separation costs were related to stock compensation, severance and other employee costs, as well as impairment charges due to the write-off of right-of-use assets and furniture, fixtures and equipment as a result of the Company abandoning portions of its administrative offices in New Jersey.

These expenses also include additional impairment charges associated with the write-off of assets and liabilities related to the early termination of an operating lease in Chicago, Illinois, partially offset by an indemnification receivable from Wyndham Hotels.

Refer to Note 13— Leases for additional detail regarding these impairments.

COVID-19 Related Items

During the year ended December 31, 2022, the Company had $ 2 million of employee compensation related and other expenses at its corporate operations directly related to COVID-19.

These costs are included within COVID-19 related costs on the Consolidated Statements of Income/(Loss).

For the year ended December 31, 2021, the Company’s financial statements included impacts directly related to COVID-19 as detailed in the table below (in millions):

4 unchanged sentences

Employee compensation related and other 3 — 1 4 COVID-19 related costs

Asset impairment recovery — ( 6 ) — ( 6 ) Asset impairments/(recovery)

Asset recoveries — ( 6 ) — ( 6 ) Asset impairments/(recoveries), net

Lease-related ( 1 ) — — ( 1 ) Restructuring

6 unchanged sentences

Employee compensation related and other 65 9 14 88 COVID-19 related costs

Asset impairments 21 34 1 56 Asset impairments/(recovery) and Operating expenses

Asset impairments 21 34 1 56 Asset impairments/(recoveries), net and Operating expenses

Exchange inventory write-off — 48 — 48 Operating expenses

1 unchanged sentence

Total COVID-19 $ 257 $ 113 $ 15 $ 385

Allowance for loan losses — Due to the closure of resorts and sales centers and the economic downturn resulting from COVID-19 during 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of higher unemployment, the Company recorded a COVID-19 related allowance for loan losses.

This allowance consisted of a $ 205 million COVID-19 related provision, which was reflected as a reduction to Vacation ownership interest sales and $ 48 million of estimated recoveries, which were reflected as a reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

The net negative impact of this COVID-19 related provision on Adjusted EBITDA was $ 157 million for the year ended December 31, 2020.

During 2021, the Company analyzed the adequacy of the COVID-19 related allowance consistent with past methodology, and due to the improvement in net new defaults the Company reduced this allowance resulting in a $ 91 million increase to Vacation ownership interest sales and a corresponding $ 33 million increase to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

Allowance for loan losses — Due to the economic downturn resulting from COVID-19 during 2020, the Company evaluated the potential impact of COVID-19 on its owners’ ability to repay their contract receivables and as a result of higher unemployment, the Company recorded a COVID-19 related allowance for loan losses.

During 2020, the total impact of this COVID-19 related allowance and subsequent adjustments resulted in a $ 205 million COVID-19 related provision, which was reflected as a reduction to Vacation ownership interest sales and $ 48 million of estimated recoveries, which were reflected as a reduction to Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

The net negative impact of these adjustments on Adjusted EBITDA was $ 157 million for the year ended December 31, 2020.

During the year ended December 31, 2021, the Company analyzed the adequacy of this COVID-19 related allowance consistent with past methodology, and due to the improvement in net new defaults the Company reduced this allowance resulting in an increase of $ 91 million to Vacation ownership interest sales and a corresponding increase of $ 33 million to Cost of vacation ownership interests.

The net positive impact of these adjustments on Adjusted EBITDA was $ 58 million for the year ended December 31, 2021.

Based upon improved performance in the Company’s portfolio (lower net new defaults) and improved unemployment rates since the time this allowance was established, and after considering write-offs and the allowance for remaining likely defaults associated with loans that were granted payment deferrals, the

Company has no COVID-19 related allowances as of December 31, 2021.

Refer to Note 9— Vacation Ownership Contract Receivables for additional details.

Employee compensation related and other — During 2020, these costs included $ 71 million related to severance and other employee costs resulting from the layoffs, salary and benefits continuation for certain employees while operations were suspended, and vacation payments associated with furloughed employees.

These costs are inclusive of $ 26 million of employee retention credits earned in connection with government programs, primarily the CARES Act.

Employee compensation related and other costs also included $ 17 million related to renegotiating or exiting certain agreements and other professional fees in 2020.

During 2021, employee compensation related and other costs included $ 3 million of professional and other costs;

as well as $ 1 million of severance and other employee costs resulting from layoffs, salary and benefits continuation at the Vacation Ownership segment, inclusive of $ 2 million of employee retention credits earned in connection with government programs.

In connection with these actions the Company recorded COVID-19 employee-related liabilities which are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The activity associated with the Company’s COVID-19 related liabilities is summarized as follows (in millions):

Liability as of Liability as of

December 31, 2020 Costs Recognized Cash Payments December 31, 2021

COVID-19 employee-related $ 6 $ 1 $ ( 6 ) $ 1

Ending balance $ 6 $ 1 $ ( 6 ) $ 1

Asset impairments/(recovery) — During 2020, the Company incurred $ 56 million of COVID-19 related impairments, including $ 51 million recorded within Asset impairments/(recovery) and $ 5 million included in Operating expenses on the Consolidated Statements of Income/(Loss).

Asset impairments/(recoveries) — During 2020, the Company incurred $ 56 million of COVID-19 related impairments, including $ 51 million recorded within Asset impairments/(recoveries), net and $ 5 million included in Operating expenses on the Consolidated Statements of Income/(Loss).

Refer to Note 25— Impairments and Other Charges for additional details.

During 2021, the Company reversed $ 6 million of asset impairments related to its previously impaired equity investment in Vacasa.

Refer to Note 7— Held-for-Sale Business for additional details.

Refer to Note 17— Fair Value for additional details.

Exchange inventory write-off — During 2020, the Company wrote-off $ 48 million of exchange inventory as discussed in Note 10— Inventory.

Lease-related — During 2020, the Company recognized $ 36 million of restructuring charges including $ 22 million related to the New Jersey lease discussed in Note 26— Restructuring and $ 12 million related to the renegotiation of an agreement.

Employee compensation related and other — During 2022 these costs were related to COVID-19 testing and other expenses associated with the Company’s return-to-work program.

During 2021 these costs included $ 3 million of professional and other costs and $ 1 million of severance and other employee costs resulting from layoffs, salary, and benefits continuation at the Vacation Ownership segment.

These costs were inclusive of $ 2 million of employee retention credits earned in connection with government programs for the year ended December 31, 2021.

During 2020, these costs included $ 71 million related to severance and other employee costs resulting from the layoffs, salary and benefits continuation for certain employees while operations were suspended, and vacation payments associated with furloughed employees.

These costs are inclusive of $ 26 million of employee retention credits earned in connection with government programs, primarily the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act for which there are no additional requirements or restrictions.

Employee compensation related and other costs also included $ 17 million related to renegotiating or exiting certain agreements and other professional fees in 2020.

In connection with COVID-19 related actions taken by the Company, it recorded employee-related liabilities which are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

The activity associated with these COVID-19 related liabilities is summarized as follows (in millions):

Liability as of 2020 Activity Liability as of

December 31, 2019 Costs Recognized Cash Payments Other (a)

December 31, 2020

COVID-19 employee-related $ — $ 71 $ ( 64 ) $ ( 1 ) $ 6

Ending balance $ — $ 71 $ ( 64 ) $ ( 1 ) $ 6

Liability as of 2021 Activity Liability as of

December 31, 2020 Costs Recognized Cash Payments Other December 31, 2021

COVID-19 employee-related $ 6 $ 1 $ ( 6 ) $ — $ 1

Ending balance $ 6 $ 1 $ ( 6 ) $ — $ 1

Liability as of 2022 Activity Liability as of

December 31, 2021 Costs Recognized Cash Payments Other December 31, 2022

COVID-19 employee-related $ 1 $ 2 $ ( 3 ) $ — $ —

Ending balance $ 1 $ 2 $ ( 3 ) $ — $ —

(a) Includes employee-related write-offs.

Impairments and Other Charges

During 2021, the Company had a net $ 5 million recovery of impairments driven by the $ 6 million reversal of a 2020 COVID-19 related impairment of the Vacasa equity investment at the Travel and Membership segment.

See Note 7— Held-for-Sale Business for additional details.

During 2022, the Company recorded $ 10 million of impairments within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

These impairments include a $ 9 million loss on the sale at the Vacation Ownership segment related to certain property sold for $ 22 million, made up of $ 17 million in cash and a $ 5 million promissory note.

The Company also recorded a $ 2 million impairment of fixed assets at the Vacation Ownership segment and a $ 2 million trade name impairment at the Travel and Membership segment.

These impairments were offset by $ 3 million of asset recoveries, primarily related to previously impaired land which was sold during 2022.

During 2021, the Company had net asset recoveries of $ 5 million driven by the $ 6 million reversal of a 2020 COVID-19 related impairment of the Vacasa equity investment at the Travel and Membership segment.

This reversal was partially offset by less than $ 1 million of impairments at the Vacation Ownership segment.

This activity was recorded within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

During 2020, the Company recorded $ 52 million of asset impairments, $ 51 million of which were COVID-19 related.

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a $ 6 million impairment for the Vacasa equity investment held at the Travel and Membership segment;

a $ 4 million impairment at the Travel and Membership segment related to the Love Home Swap trade name;

a $ 4 million trade name impairment at the Travel and Membership segment;

and $ 1 million of impairments at the corporate segment.

These impairments are recorded within Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

In addition to the COVID-19 related impairments mentioned above, the Company also recorded a $ 1 million impairment charge at the Vacation Ownership segment unrelated to COVID-19.

During 2019, the Company sold certain property for $ 52 million in cash and a note receivable of $ 4 million.

The Company recorded a loss of $ 27 million, which is recorded within Asset impairments/(recovery) on the Consolidated Statements of Income/(Loss).

This activity was recorded within Asset impairments/(recoveries), net on the Consolidated Statements of Income/(Loss).

Other Charges

Refer to Note 25— Separation and Transaction Costs, for discussion of the additional 2019 impairments associated with the Spin-off.

During 2022, the Company recorded a $ 1 million inventory impairment at the Vacation Ownership segment included within Cost of vacation ownership interests on the Consolidated Statements of Income/(Loss).

Restructuring

2022 Restructuring Plans

During 2020, the Company recorded $ 37 million of restructuring charges, $ 36 million of which were COVID-19 related.

Due to the impact of COVID-19, the Company decided in the second quarter of 2020 to abandon the remaining portion of its administrative offices in New Jersey.

The Company was notified in the second quarter that Wyndham Hotels exercised its early termination rights under the sublease agreement.

The Company also recognized $ 12 million of lease-related charges due to the renegotiation of an agreement and $ 2 million of facility-related restructuring charges associated with closed sales centers at its Vacation Ownership segment.

The Travel and Membership segment additionally recognized $ 1 million in employee-related expenses associated with the consolidation of a shared service center.

The Company reduced the 2020 restructuring liability by $ 5 million and $ 12 million of cash payments during 2021 and 2020.

The remaining 2020 restructuring liability of $ 22 million is expected to be paid by the end of 2029.

During 2022, the Company incurred $ 14 million of restructuring charges.

These charges are associated with certain positions that were made redundant based upon changes to the organizational structure of the Company, primarily within the Travel and Membership segment.

The charges consisted of (i) $ 9 million of personnel costs at the Travel and Membership segment (ii) $ 3 million of lease and personnel-related costs at the Vacation Ownership segment, and (iii) $ 2 million of personnel-related costs at the Company’s corporate operations.

These restructuring charges included $ 3 million of accelerated stock-based compensation expense.

All material initiative and related expenses have been incurred as of December 31, 2022.

The 2022 restructuring liability was reduced by $ 5 million of cash payments during the year ended December 31, 2022.

The majority of the remaining 2022 restructuring liability of $ 7 million is expected to be paid in 2023 with lease-related payments continuing through 2025.

2020 Restructuring Plans

During 2019, the Company recorded $ 5 million of charges related to restructuring initiatives, most of which are personnel-related resulting from a reduction of approximately 100 employees.

This action is primarily focused on enhancing organizational efficiency and rationalizing operations.

The charges consisted of (i) $ 2 million at the Vacation Ownership segment, (ii) $ 2 million at the Travel and Membership segment, and (iii) $ 1 million at the Company’s corporate operations.

During 2020, the Company incurred an additional $ 1 million of restructuring expenses at both the Travel and Membership segment and its corporate operations.

The Company reduced its restructuring liability by less than $ 1 million, $ 5 million, and $ 1 million of cash payments during 2021, 2020, and 2019.

The 2019 restructuring liability was paid off as of December 31, 2021.

During 2020, the Company recorded $ 37 million of restructuring charges, most of which were COVID-19 related.

These charges included $ 22 million at the Travel and Membership segment associated with the Company’s decision to abandon the remaining portion of its administrative offices in New Jersey, and $ 14 million of lease-related charges due to the renegotiation of an agreement and facility-related restructuring charges associated with closed sales centers at the Vacation Ownership segment.

This restructuring liability was reduced by $ 3 million, $ 5 million, and $ 12 million of cash payments during the years ended December 31, 2022, 2021 and 2020.

The remaining 2020 restructuring liability of $ 19 million is lease-related and is expected to be paid by the end of 2029.

The activity associated with all of the Company’s restructuring plans is summarized by category as follows (in millions):

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Payments Other December 31, 2020

Personnel-related $ 12 $ 9 $ ( 14 ) $ — $ 7

Facility-related $ — $ 24 $ ( 1 ) $ — $ 23

Personnel-related 7 3 (a)

Marketing-related — 12 ( 10 ) — 2

$ 7 $ 39 $ ( 20 ) $ — $ 26

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Payments Other December 31, 2021

Personnel-related $ 7 $ 3 $ ( 9 ) $ — $ 1

Facility-related $ 23 $ — $ ( 1 ) $ — $ 22

Marketing-related — 12 ( 10 ) — 2

Personnel-related 1 — ( 1 ) — —

Marketing-related 2 ( 1 ) (b)

$ 26 $ ( 1 ) $ ( 6 ) $ 3 $ 22

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Payments Other December 31, 2022

Personnel-related $ 1 $ — $ ( 1 ) $ — $ —

Facility-related $ 22 $ 1 $ ( 4 ) $ 1 $ 20

Marketing-related 2 ( 1 ) (a)

Personnel-related — 13 ( 4 ) ( 3 ) (d)

$ 22 $ 14 $ ( 8 ) $ ( 2 ) $ 26

(a) Includes $ 1 million reversal of expense related to the reimbursement of prepaid licensing fees that were previously written-off at the Vacation Ownership segment.

(b) Includes $ 2 million reimbursement of termination payments and $ 1 million reimbursement of license fees at the Vacation Ownership segment.

(a) Includes $ 2 million of restructuring charges related to 2019 Restructuring Plans which have been fully repaid.

(b) Includes $ 1 million reversal of expense related to the reimbursement of prepaid licensing fees that were previously written-off at the Vacation Ownership segment.

(c) Includes $ 2 million reimbursement of termination payments and $ 1 million reimbursement of license fees at the Vacation Ownership segment.

(d) Represents $ 3 million of accelerated stock-based compensation expense included in Additional paid-in capital on the Consolidated Balance Sheets.

Transactions with Former Parent and Former Subsidiaries

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Since Cendant’s separation, Cendant has settled the majority of the lawsuits that were pending on the date of the separation.

As of December 31, 2021 and 2020 the Cendant separation and related liabilities were $ 13 million, all of which were tax related.

As of December 31, 2022 and 2021 the Cendant separation and related liabilities were $ 15 million and $ 13 million, all of which were tax related liabilities.

These liabilities are included within Accrued expenses and other liabilities on the Consolidated Balance Sheets.

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entered into several agreements with Wyndham Hotels that govern the relationship of the parties following the separation including the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement and the License, Development and Noncompetition Agreement.

On January 4, 2021, the Company and Wyndham Hotels entered into a letter agreement pursuant to which, among other things Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement.

The Company and Wyndham Hotels entered into a letter agreement during 2021 pursuant to which, among other things Wyndham Hotels waived its right to enforce certain noncompetition covenants in the License, Development and Noncompetition Agreement.

In accordance with the agreements governing the relationship between Travel + Leisure Co.

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Likewise, Travel + Leisure Co.

is entitled to receive two-thirds and Wyndham Hotels is entitled to receive one-third of the proceeds from certain contingent corporate assets of the Company arising or accrued prior to the Spin-off.

is entitled to receive two-thirds and Wyndham Hotels is entitled to receive one-third of the proceeds from certain contingent corporate assets of the Company arising prior to the Spin-off.

Travel + Leisure Co.

entered into a transition service agreement with Wyndham Hotels, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, tax, information technology, information management and related services, treasury, finance, sourcing, and employee benefits administration on an interim, transitional basis.

During 2020 and 2019, the Company recognized transition service agreement expenses of less than $ 1 million and $ 3 million, included in General and administrative expense on the Consolidated Statements of Income/(Loss).

During 2019, the Company recognized transition service agreement expenses of $ 2 million which were included in Separation and related costs on the Consolidated Statements of Income/(Loss).

Transition service agreement income of $ 1 million in 2019 was included in Other revenue on the Consolidated Statements of Income/(Loss).

During 2020, the Company recognized transition service agreement expenses of less than $ 1 million, included in General and administrative expense on the Consolidated Statements of Income/(Loss).

These transition services ended in 2020.

During 2019, as a result of the sale of the North American vacation rentals business to Vacasa, the Company paid Wyndham Hotels $ 5 million for a trade name royalty buy-out.

The related expense was recorded as a reduction to Gain on sale of business on the Consolidated Statements of Income/(Loss).

Matters Related to the European Vacation Rentals Business

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in the event that the post-closing credit support is enforced or called upon.

Such post-closing credit support included a guarantee of up to $ 180 million which expired June 30, 2019.

At closing, the Company agreed to provide additional post-closing credit support to a British travel association and regulatory authority.

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The Company maintains a $ 7 million receivable from Wyndham Hotels for its portion of the guarantee.

During 2019, the Company reached an agreement with Awaze on certain post-closing adjustments, resulting in a reduction of proceeds by $ 27 million.

In accordance with the separation agreement, the Company and Wyndham Hotels agreed to share two-thirds and one-third, in the European vacation rentals business’ final net proceeds (as defined by the sales agreement).

The Company paid $ 40 million to Wyndham Hotels in 2019 for certain items including the return of the escrow, post-closing adjustments, transaction expenses, and estimated taxes.

The Company also deposited $ 5 million into an escrow account for which all obligations ceased to exist on May 9, 2019.

The escrow was returned to the Company in May 2019.

In addition, the Company agreed to indemnify Awaze against certain claims and assessments, including income tax, value-added tax and other tax matters, related to the operations of the European vacation rentals business for the periods prior to the transaction.

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During 2020, the Company recorded a $ 2 million loss on disposal resulting from a tax audit, net of Wyndham Hotels’ one-third share related to the European vacation rentals business.

This additional expense was included within (Loss)/gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

This additional expense was included within Gain/(loss) on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income/(Loss).

Wyndham Hotels provided certain post-closing credit support primarily for the benefit of a British travel association in the form of guarantees which are mainly denominated in pound sterling of up to £ 61 million ($ 81 million USD) on a perpetual basis.

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As a result of the Wyndham Hotels credit ratings downgrade, during 2020, the Company posted a £ 58 million surety bond and a £ 36 million letter of credit.

During the third quarter of 2021, S&P upgraded Wyndham Hotels’ credit rating to BB+.

During 2021, S&P upgraded Wyndham Hotels’ credit rating to BB+.

In connection with the upgrade of Wyndham Hotels’ credit rating and as part of the settlement of other claims, the surety bond and letter of credit were released during the fourth quarter of 2021.

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During 2019, Awaze proposed certain post-closing adjustments of £ 35 million ($ 44 million USD) related to the sale of the European vacation rentals business.

During the fourth quarter of 2021, the Company entered into a settlement agreement, contingent upon regulatory approval, to settle these post-closing adjustment claims for £ 5 million ($ 7 million USD), one-third of which is the responsibility of Wyndham Hotels.

During 2021, the Company entered into a settlement agreement which received regulatory approval during 2022 to settle these post-closing adjustment claims for £ 5 million ($ 7 million USD);

one-third of which was the responsibility of Wyndham Hotels.

During the third quarter of 2022, the Company made this settlement payment which was included within Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows, and received $ 2 million from Wyndham Hotels for their one-third portion which was included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

This matter is now resolved and no further payments are required.

Travel + Leisure Co.

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During 2020, transition service agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 million.

During 2019, transition service agreement expenses were $ 2 million and transition service agreement income was $ 2 million.

Transition service agreement expenses were included in General and administrative expense and transition service income was included in Net revenues on the Consolidated Statements of Income/(Loss).

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In connection with the sale of the North American vacation rentals business in the fourth quarter of 2019, the Company entered into a transition service agreement with Vacasa, pursuant to which the companies agreed to provide each other certain transitional services including human resources, facilities, payroll, information technology, information management and related services, treasury, and finance on an interim, transitional basis.

During 2021, transition service agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 million.

During 2020, transition service agreement expenses were $ 1 million and transition service agreement income was $ 2 million.

During 2021, transition service

agreement expenses were less than $ 1 million and transition service agreement income was less than $ 1 million.

During 2020, transition service agreement expenses were $ 1 million and transition service agreement income was $ 2 million.

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Related Party Transactions

During 2021, the Company sold a parcel of land in Crossville, Tennessee, that is no longer core to the Company’s Operations to a former executive of the Company for less than $ 1 million.

During 2020, the Company sold parcels of land in Shawnee, Pennsylvania, that are no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

The Company occasionally sublets an aircraft from its former CEO and current Chairman of the Board of Directors for

business travel through a timesharing arrangement.

The Company incurred less than $ 1 million of expenses related to this timesharing arrangement during the years ended December 31, 2022, 2021, and 2020.

During 2021, the Company sold a parcel of land in Crossville, Tennessee, that was no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

During 2020, the Company sold parcels of land in Shawnee, Pennsylvania, that were no longer core to the Company’s operations to a former executive of the Company for less than $ 1 million.

In 2019, the Company entered into an agreement with a former executive of the Company whereby the former executive through an SPE would develop and construct VOI inventory located in Orlando, Florida.

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This agreement was subsequently amended during 2021, increasing the purchase to $ 47 million.

In August 2018, the Company provided notification to the owner trustee of the Company’s leased aircraft of its intent to exercise the purchase option for such aircraft at fair market value.

In connection with that purchase, the Company entered into an agreement to sell the Company aircraft to its former CEO and current Chairman of the Board of Directors at a price equivalent to the purchase price.

In January 2019, the transactions to purchase and sell the aircraft for $ 16 million closed.

The Company occasionally sublets this aircraft for business travel through a timesharing arrangement, and incurred less than $ 1 million of expenses in 2021, 2020, and 2019.

Subsequent Events

On January 3, 2023, the Company acquired the Playbook365 business for $ 6 million of cash paid at closing and contingent consideration of up to $ 24 million based on the achievement of certain financial and operational metrics.

Playbook365 is a youth and amateur sports management platform.

This platform will integrate with ARN’s event lodging management platform to create an all-in-one solution in the youth sports market.

This acquisition was made to broaden the products and services offered by ARN.

The Company is currently in the process of determining the initial purchase accounting for this transaction and expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of 2023.

This business will be included within the Travel and Membership segment.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data